0 Required information The following information applies to the questions displa

Question

0 Required information The following information applies to the questions displayed below On January 1, year 1, Dave received 1,000 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $7 per share. Dave's restricted shares will vest at the end of year 2. He intends to hold the shares until the end of year 4 when he intends to sell them to help fund the purchase of a new home. Dave predicts the share price of RRK will be $30 per share when his shares vest and will be $40 per share when he sells them. (Leave no answer blank. Enter zero if applicable.) a. If Dave's stock price predictions are correct, what are the taxes due on these transactions to Dave if his ordinary marginal rate is 30 percent and his long-term capital gains rate is 15 percent? Taxes Due Grant date Vesting date Sale date

Explanation / Answer

Taxes due Formula Grant Date $               -   Vesting Date $        9,000 =(30*1000)*30% Sale date $        1,500 =(40*1000-30*1000)*15% Tax on grant date is zero. Tax on vesting date will be charged at 30% rate and on sale date will be 15% of sale price above adjusted basis.

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