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 will be $40 per share when he sells them. Assume that Dave's price predictions are correct and answer the following questions: (Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.)
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 will be $40 per share when he sells them. Assume that Dave's price predictions are correct and answer the following questions: (Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 will be
$40 per share when he sells them. Assume that Dave's price predictions are correct and answer the following questions:
(Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.)
b. If Dave's stock price predictions are correct, what are the tax consequences of these transactions to RRK?
Answer is complete but not entirely correct.
Tax
Consequences
Grant date
Vesting date
Sale date
$
$
$
2,450
0
0
···
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