How much income or gain does he recognize

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Reference no: EM13517104

Luis received 400 shares of his employer's stock as a bonus. He must return the stock to the company if he leaves before the 5-year vesting period ends. The fair market value of the stock at the time it was issued was $20,000. After five years, the stock vests when it has a fair market value of $75,000. Two years after vesting, Luis sells the stock for $100,000.

a. If Luis makes no election, how much income or gain does he recognize (1) when the stock is issued, (2) when the stock vests, and (3) when the stock is sold?

b. If Luis makes an election to accelerate the recognition of income, how much income or gain does he recognize (1) when the stock is issued, (2) when the stock vests, and (3) when the stock is sold?

c. If Luis makes an election to accelerate the recognition of income but he leaves the company after three years, is he eligible for a refund of taxes paid?

Reference no: EM13517104

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