Santinisnew contract for 2018 indicates the following compensation and benefits: Benefit Description Amount Salary $130,000 Health insurance
Question:
Santini’snew contract for 2018 indicates the following compensation and benefits:
Benefit Description | Amount |
Salary | $130,000 |
Health insurance | $9,000 |
Restricted stock granted | $2,500 |
Bonus | $5,000 |
Hawaii trip | $4,000 |
Group-term life insurance | $1,600 |
Parking ($290 per month) | $3,480 |
Santini is 54 years old at the end of 2018. 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, 2018, 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 2017. The group-term life policy gives him $150,000 of coverage. Assume that Santini does not itemize deductions for the year.Determine Santini’s taxable income and income tax liability for 2018.
Strike PriceIn finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
Step by Step Answer:
Taxation Of Individuals And Business Entities 2019 Edition
ISBN: 9781259918391
10th Edition
Authors: Brian C. Spilker, Benjamin C. Ayers, John Robinson, Edmund Outslay, Ronald G. Worsham, John A. Barrick, Connie Weaver