On January 1, year 1, Dave received 2,200 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $18 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 $29 per share when his shares vest and $56 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions: Note: Leave no answers blank. Enter zero if applicable. Round your final answer to the nearest whole dollar value. Enter all amounts as positive values. 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 2,200 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $18 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 $29 per share when his shares vest and $56 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions: Note: Leave no answers blank. Enter zero if applicable. Round your final answer to the nearest whole dollar value. Enter all amounts as positive values. 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?
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 66P
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Transcribed Image Text:On January 1, year 1, Dave received 2,200 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price
was $18 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 $29 per share when his shares vest and $56 per share when he sells them. Assume that Dave's
price predictions are correct, and answer the following questions:
Note: Leave no answers blank. Enter zero if applicable. Round your final answer to the nearest whole dollar value. Enter all
amounts as positive values.
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?
Complete this question by entering your answers in the tabs below.
Required A Required B
What are Dave's taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?
Grant date
Vesting date
Sale date
Taxes Due
$ 12,672
Required A
Required B
What are the tax consequences of these transactions to RRK?
Grant date
Vesting date
Sale date
Tax
consequences
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