On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $7 per share. On receiving the restricted stock, Dave made the 83(b) election. Dave's restricted shares will vest at the end of year 2. He intends to hold the shares until the end of year 4, when he intends to sell them to help fund the purchase of a new home. Dave predicts the share price of RRK will be $30 per share when his shares vest and $40 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions: Note: Enter all amounts as positive values. Leave no answers blank. Enter zero If applicable. Required: a. What are Dave's taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate Is 15 percent? b. What are the tax consequences of these transactions to RRK?
On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $7 per share. On receiving the restricted stock, Dave made the 83(b) election. Dave's restricted shares will vest at the end of year 2. He intends to hold the shares until the end of year 4, when he intends to sell them to help fund the purchase of a new home. Dave predicts the share price of RRK will be $30 per share when his shares vest and $40 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions: Note: Enter all amounts as positive values. Leave no answers blank. Enter zero If applicable. Required: a. What are Dave's taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate Is 15 percent? b. What are the tax consequences of these transactions to RRK?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Vikrambhai
Transcribed Image Text:On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On
that date, the stock price was $7 per share. On receiving the restricted stock, Dave made the 83(b) election.
Dave's restricted shares will vest at the end of year 2. He intends to hold the shares until the end of year 4,
when he intends to sell them to help fund the purchase of a new home. Dave predicts the share price of
RRK will be $30 per share when his shares vest and $40 per share when he sells them. Assume that Dave's
price predictions are correct, and answer the following questions:
Note: Enter all amounts as positive values. Leave no answers blank. Enter zero If applicable.
Required:
a. What are Dave's taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate
Is 15 percent?
b. What are the tax consequences of these transactions to RRK?
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required b
What are the tax consequences of these transactions to RRK?
Tax
Consequences
Grant date
S
0x
Vesting date
S
00
Sale date
S
00
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