Rick Recently Received 500 Shares of Restricted Stock from His

question 100

Essay

Rick recently received 500 shares of restricted stock from his employer,Crazy Corporation,when the share price was $5 per share.Rick's restricted shares vested three years later when the market price was $12.Rick held the shares for a little more than a year after vesting and sold them when the market price was $15.Assuming that Rick made an election under section 83(b)when the stock was granted and that his marginal tax rate is 30 percent,what is the amount of Rick's income inclusion and tax liability upon the sale of the stock?

---

Definitions:

Federal Government

The national government of a federal country that is responsible for areas of governance assigned to it by the constitution, distinct from state or provincial governments.

Bondholder

An individual or entity that holds the debt security issued by companies or governments, entitling them to receive the bond's face value plus interest.

Shareholder

An individual or organization that owns one or more shares of stock in a public or private corporation, thus holding a portion of the company's ownership.

Corporate Charter

A corporate charter, also known as articles of incorporation, is a legal document that establishes a corporation, outlining its structure, objectives, and the rules governing its operation.