**Tax Implications of Stock-Based Compensation**

Stock-based compensation is a form of employee remuneration where employees receive company stock or stock options as part of their overall compensation package. The tax implications of stock-based compensation can vary depending on the type of award and the timing of its exercise.

**Key Points:**

1. **Taxation upon Vesting:** Restricted stock units (RSUs) are taxed when they vest. The fair market value of the shares at vesting becomes taxable income for the employee.

2. **Taxation upon Exercise:** Stock options are taxed when exercised. The difference between the exercise price and the fair market value of the stock at the time of exercise is considered taxable income.

3. **Capital Gains Tax:** For stock acquired through stock options or RSUs, any subsequent sale of the stock may result in capital gains or losses. The tax treatment depends on whether the stock is held for a qualifying period.

**Objective Type Question:**

When are restricted stock units (RSUs) typically subject to taxation for employees?

A) At the time of grant B) At the time of exercise C) At the time of vesting D) At the time of stock sale

Please select the correct option and provide a brief explanation for your choice based on the information provided.