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 $38 per share when his shares vest and $43 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions:
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 $38 per share when his shares vest and $43 per share when he sells them. Assume that Dave's price predictions are correct, and answer the following questions:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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r
![[The following information applies to the questions displayed below.]
On January 1, year 1, Dave received 2,150 shares of restricted stock from his
employer, RRK Corporation. On that date, the stock price was $24 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 $38
per share when his shares vest and $43 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.
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?
Grant date
Vesting date
Sale date
Taxes Due
$
$ 26,144
$
1,613
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0d07bb18-8908-4249-a489-768d0c063ce4%2Fecf45668-c47e-4b4c-aec3-6790fbe5db81%2Fi9btl9l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
On January 1, year 1, Dave received 2,150 shares of restricted stock from his
employer, RRK Corporation. On that date, the stock price was $24 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 $38
per share when his shares vest and $43 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.
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?
Grant date
Vesting date
Sale date
Taxes Due
$
$ 26,144
$
1,613
0
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