Pony, Inc., issues restricted stock to employees in July 2017, 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. The stock 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 2017, 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 2021 at $36 per share. What amount and type of income will Sam recognize in 2021?

Question

Quizplus · Accepted Answer

The correct answer is A.The amount of income recognized in 2021 is $26,000, which is a capital gain. The capital gain is calculated as the difference between the sale price of the stock ($36 per share) and the fair market value of the stock at the time of vesting ($30 per share), multiplied by the number of shares (1,000).

Pony, Inc, Issues Restricted Stock to Employees in July 2017, with with a Two-Year