In 2018, Faro Inc., a calendar year taxpayer, issued 500 shares of its publicly traded stock as
Question:
In 2018, Faro Inc., a calendar year taxpayer, issued 500 shares of its publicly traded stock as a bonus to its employee, Mrs. Doyle. On the date of issuance, the stock's fair market value was $16,750. What are the 2018 tax consequences to Mrs. Doyle and Faro if:
a. Mrs. Doyle's ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of forfeiture).
b. Mrs. Doyle can't dispose of the stock before July 1, 2023, and if she quits her job with Faro before that date, she must forfeit the stock back to Faro. Mrs. Doyle made no election with respect to the restricted stock.
Assume the taxable year is 2018.
Step by Step Answer:
a Mrs Doyle would recognize 16750 ordinary comp...View the full answer
Principles Of Taxation For Business And Investment Planning 2019 Edition
ISBN: 9781260161472
22nd Edition
Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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