On May 31, 2012, Andro Corporation sold 500 shares of its stock to Nombeko, an employee, for
Question:
On May 31, 2012, Andro Corporation sold 500 shares of its stock to Nombeko, an employee, for $100 per share. No special election is made. At the time of the sale, the fair market value of the stock was $200 per share. Under the terms of the sale, each share of stock was nontransferable and subject to a substantial risk of forfeiture (which was not to lapse until May 31, 2017). Evidence of these restrictions was stamped on the face of the stock certificates. On May 31, 2017, the fair market value of the stock was $400 per share.
a. What amount is Nombeko required to include as income in 2017?
b. What compensation deduction is Andro Corporation allowed?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
As a general rule if an employee performs services and receives property eg stock the fair market value of that property in excess of any amount paid ...View the full answer
South Western Federal Taxation Individual Income Taxes 2018
ISBN: 9781337385893
41st Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young, Nellen
