Homework Answers
Part B
|
Net cash flow |
|
|
Restricted stock |
$935 |
|
Vesting date |
$(240) |
|
Sale date |
$(75) |
|
Description |
Amount |
Explanation |
|
(1) Amount Realized |
1250 |
(50*25) |
|
(2) Cash outflow for taxes at exercise |
240 |
|
|
(3) Cash outflow for taxes at sale |
75 |
|
|
(4) Net cash flow |
$935 |
(1)-(2)-(3) |
|
Description |
Amount |
Explanation |
|
(1) Shares acquired |
50 |
|
|
(2) FMV at vesting date |
15 |
|
|
(3) Ordinary income on vesting date |
750 |
(1) x (2) |
|
(4) Ordinary Marginal Tax Rate |
32% |
|
|
(5) Tax due when shares vest |
$240 |
(3) x (4) |
|
Description |
Amount |
Explanation |
|
(1) Amount realized |
1250 |
(50*25) |
|
(2) Adjusted basis |
750 |
|
|
(3) Long-term capital gain |
$500 |
(1) - (2) |
|
(4) Preferential Marginal Tax Rate |
15% |
|
|
(5) Tax due when shares sold |
$75 |
(3) x (4) |
Part C
Part B
|
Net cash flow |
|
|
Restricted stock |
$1020 |
|
Vesting date |
$(80) |
|
Sale date |
$(150) |
|
Description |
Amount |
Explanation |
|
(1) Amount Realized |
1250 |
(50*25) |
|
(2) Cash outflow for taxes at exercise |
80 |
|
|
(3) Cash outflow for taxes at sale |
150 |
|
|
(4) Net cash flow |
$1020 |
(1)-(2)-(3) |
|
Description |
Amount |
Explanation |
|
(1) Shares acquired |
50 |
|
|
(2) FMV at vesting date |
15 |
|
|
(3) Ordinary income on vesting date |
250 |
(1) x (2) |
|
(4) Ordinary Marginal Tax Rate |
32% |
|
|
(5) Tax due when shares vest |
$80 |
(3) x (4) |
|
Description |
Amount |
Explanation |
|
(1) Amount realized |
1250 |
(50*25) |
|
(2) Adjusted basis |
250 |
|
|
(3) Long-term capital gain |
$1000 |
(1) - (2) |
|
(4) Preferential Marginal Tax Rate |
15% |
|
|
(5) Tax due when shares sold |
$150 |
(3) x (4) |
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