Question
Santinis new contract for 2014 indicates the following compensation and benefits : Benefit Description Amount Salary $ 130,000 Health insurance 9,000 Restricted stock grant 2,500
Santinis new contract for 2014 indicates the following compensation and benefits: |
Benefit Description | Amount | |
Salary | $ | 130,000 |
Health insurance | 9,000 | |
Restricted stock grant | 2,500 | |
Bonus | 5,000 | |
Hawaii trip | 4,000 | |
Group-term life insurance | 1,600 | |
Parking ($275 per month) | 3,300 | |
Santini is 54 years old at the end of 2014. He is single and has no dependents. Assume that the employer matches $1 for $1 for the first $6,000 that the employee contributes to his 401(k) during the year. The 100 ISOs each allow the purchase of 10 shares of stock at a strike price of $5 (also the market price on the date of grant). The ISOs vest in two years when the stock price is expected to be $15 and Santini expects to sell the shares in three years when the market price is $20. The restricted stock grant is 500 shares granted when the market price was $5 per share. Assume that the stock vests on December 31, 2014, and that the market price on that date is $7.50 per share. Also assume that Santini is willing to make any elections to reduce equity-based compensation taxes. The Hawaii trip was given to him as the outstanding sales person for 2013. The group-term life policy gives him $150,000 of coverage. Assume that Santini does not itemize deductions for the year. Assume that Santini makes a section 83(b) election. |
Determine Santini's taxable income andincome tax liability for 2014. Use Tax rate schedule and Exhibit 12-10. (Round your answer to the nearest whole dollar amount.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started