Pony, Inc., issues restricted stock to employees in July 2019, with a two-year vesting period and an SRF.An employee must remain a full-time employee of Pony for two years after the restricted stock is issued.It is trading at $10 per share when Sam is issued 1,000 shares, and he proceeds to make a § 83(b) election.At the end of 2019, the stock is selling for $13 per share.Sam remains a full-time employee of Pony for the required two-year vesting period at which time the stock is worth $30 per share.Sam sells his 1,000 shares in 2023 at $36 per share.What amount and type of income will Sam recognize in 2023?

Question

Quizplus · Accepted Answer

Sam will recognize a $26,000 capital gain in 2023 because he made a § 83(b) election, which means he chose to include the fair market value of the stock at the time of grant ($10,000) in his income for 2019. The sale price in 2023 ($36,000) minus the value at the time of grant ($10,000) equals a $26,000 capital gain.

Pony, Inc, Issues Restricted Stock to Employees in July 2019, with with a Two-Year