Tobey Receives 1,000 Shares of YouDog! Stock as Part of His

question 11

Multiple Choice

Tobey receives 1,000 shares of YouDog! stock as part of his compensation package.Tobey's employment contract with YouDog!,Inc.,states that if he leaves before completion of three years of employment,he will forfeit the stock.The stock currently has a fair market value of $12 per share.Which of the following statements regarding Tobey's choices is not true?

• A)Tobey does not have to recognize any income from receiving the stock until his rights to the stock are fully vested.
• B)Tobey must report $12,000 as income due to the receipt of the stock in the current year.
• C)Tobey may elect to report the $12,000 FMV of the stock as ordinary income in the current year.
• D)If Tobey elects to report $12,000 as income in the current year and the stock price falls to $5 per share when his rights to the stock are vested,Tobey is not allowed to deduct a loss.

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Definitions:

Chasing Games

A category of playful activities in which participants run after each other in an attempt to "catch" or tag one another.

Social Constructionism

A theory that examines the ways in which individuals and groups create their perceived reality through social interaction and cultural practices.

Natural or Innate Features

Characteristics or qualities that individuals are born with, not acquired through learning or environmental influence.

Historical

Pertaining to past events or the study of history, often involving the analysis of records and artifacts to understand human activity over time.