A stock appreciation right (SAR) entitles the holder of the right to a cash payment equal to
Question:
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 2018, L&M Corporation grants 1,000 SARs to Jasmine, an employee of L&M. On the date of the grant, the L&M stock sells for $30 per share. On December 31, 2018, the stock sells for $40; it sells for $50 on December 31, 2019, and for $55 on December 31, 2020. Jasmine exercises the SARs on December 31, 2020. When does she recognize income from the SARs, and what is the character of the income recognized?
Step by Step Answer:
Concepts In Federal Taxation 2021
ISBN: 9780357141212
28th Edition
Authors: Kevin E. Murphy, Mark Higgins, Randy Skalberg