Stevie recently received 1,000 shares of restricted stock from her employer,Nicks Corporation,when the share price was $8 per share.Stevie's restricted shares vested three years later when the market price was $11.Stevie held the shares for a little more than a year and sold them when the market price was $16.What is the amount of Stevie's ordinary income with respect to the restricted stock?
A)$0.
B)$5,000.
C)$8,000.
D)$11,000.$11,000 (1,000 shares × $11 market price on vesting date) .

Question

Quizplus · Accepted Answer

The amount of Stevie's ordinary income with respect to the restricted stock is the fair market value of the shares on the date they vested, which is $11,000 (1,000 shares x $11 market price on vesting date). She held the shares for more than a year, so any gain above $11,000 is taxed at the long-term capital gains rate. Therefore, Stevie's ordinary income is $11,000 and any additional gain is subject to capital gains tax.

Stevie Recently Received 1,000 Shares of Restricted Stock from Her