Mayra was given a 20 percent inerest in her employer corporation, Judge, Inc. Th
ID: 2528702 • Letter: M
Question
Mayra was given a 20 percent inerest in her employer corporation, Judge, Inc. The stock of which was worth $300,000 for present and future services. The stock was restricted in that she could not transfer the interest unless she is employed when the stock is expected to be worth $500,000. Which of the following is FALSE?
a. If the § 83(b) election is made, Mayra will report income of $60,000 immediately.
b. Under the general rule, Mayra will have income estimated to be $100,000 in 5 years.
c. Judge Inc. gets a deduction in the amount and time that Mayra reports income.
d. If Mayra fails to work the full 5 years, she is entitled to a loss deduction equal to her basis in her stock.
Explanation / Answer
a) If the Sec 83(b) election is made, Mayra will report income of $60000 immediately is false, as it become income and tax paid on it when stock actually transferred to Mayra. That is when she has right to do what is want with stock.