A stock appreciation right (SAR) entitles the holder of the right to a cash payment equal to

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A stock appreciation right (SAR) entitles the holder of the right to a cash payment equal to the difference between the fair market value of the stock on the date the SAR is exercised and the fair market value of a share on the date the SAR is granted. In 2014, L&M Corporation grants 1,000 SARs to Jasmine, an employee of SAR. On the date of the grant, the L&M stock sells for $30 per share. On December 31, 2014, the stock sells for $40; it sells for $50 on December 31, 2015, and for $55 on December 31, 2016. Jasmine exercises the SARs on December 31, 2016. When does she recognize income from the SARs, and what is the character of the income recognized?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Concepts In Federal Taxation 2017

ISBN: 9781305965119

24th Edition

Authors: Kevin E. Murphy, Mark Higgins

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