On January 1, year 1, Dave received 1,100 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $26 per share. On receiving the restricted stock, Dave made the 83(b) election. Daves 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 $46 per share when his shares vest and will be $49 per share when he sells them. Assume that Daves price predictions are correct and answer the following questions:

A. If Daves stock price predictions are correct, What are Daves taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?

Taxes due on:

grant date=

vesting date=

sale date=

B. If Daves stock price predictions are correct, What are the tax consequences of these transactions to RRK if its marginal rate is 21 percent?

Taxes due on:

grant date=

vesting date=

sale date=