Santini's new contract for 2014 indicates the following compensation and benefits:
Benefit Description____________________________ Amount
Salary ............................................................ $130,000
Health insurance ................................................ $9,000
Restricted stock granted ...................................... $2,500
Bonus ........................................................... $5,000
Hawaii trip ..................................................... $4,000
Group-term life insurance .................................... $1,600
Parking ($275 per month) .................................... $3,300
Santini is 54 years old at the end of 2014. He is single and has no dependents. Assume that the employer matches $1 for $1 for the first $6,000 that the employee contributes to his 401(k) during the year. The 100 ISOs each allow the purchase of 10 shares of stock at a strike price of $5 (also the market price on the date of grant). The ISOs vest in two years when the stock price is expected to be $15 and Santini expects to sell the shares in three years when the market price is $20. The restricted stock grant is 500 shares granted when the market price was $5 per share. Assume that the stock vests on December 31, 2014, and that the market price on that date is $7.50 per share. Also assume that Santini is willing to make any elections to reduce equity-based compensation taxes. The Hawaii trip was given to him as the outstanding sales person for 2013. The group-term life policy gives him $150,000 of coverage. Assume that Santini does not itemize deductions for the year. Determine Santini's taxable income and income tax liability for 2014.