On July 2, 2013, Black Corporation sold 1,000 of its common shares (worth $14 per share) to Earl, an employee, for $5 per share. The sale was subject to Earl's agreement to resell the shares to the corporation for $5 per share if his employment is terminated within the following four years. The shares had a value of $24 per share on July 2, 2017. Earl sells the shares for $31 per share on September 16, 2017. No special election under § 83(b) is made.
a. What amount, if any, is taxed to Earl on July 2, 2013?
b. On July 2, 2017?
c. On September 16, 2017?
d. What deduction, if any, will Black Corporation obtain? When?
e. Assume the same facts, except that Earl makes an election under § 83(b). What amount, if any, will be taxed to Earl on July 2, 2013, July 2, 2017, and September 16, 2017?
f. Will the assumption made in (e) have any effect on any deduction Black Corporation receives? Explain.