Question

Please answer the following questions as either TRUE or FALSE:

a. Stock Options rarely include a vesting period.

b. Restricted stock units have no voting rights.

c. A §83(b) election let’s you decide at the start of your vesting agreement to be taxed for the entire present value of the restricted stock granted.

d. Incentive stock options (“ISOs”) can be granted to employees.

e. Non-qualified stock options (“NSOs”) can be granted to anyone, including employees, consultants and directors.

f. Ordinary income is recognized upon exercise of an NSO based on the excess, if any, of the fair market value of the shares on the date of exercise over the exercise price.

g. A company may generally take a deduction for the spread between the FMV and exercise price of an ISO upon exercise of the ISO.

h. R&D credit is a valuable incentive to companies conducting QRE.

i. The R&D tax credit is calculated on the basis of increases in research activities and expenditures.

j. Officially known as the research and experimentation tax credit, it was first enacted in 1981 as part of a financial stimulus package.

k. C corporations are subject to an entity-level Federal income tax which results in what is known as a double taxation.

l. Double taxation is avoided, in part, from the fact that dividend distributions to individual shareholders are non-deductible by the corporation

m. For corporations, there is no special tax rate that applies to capital gains.

n. A sole proprietorship is not a separate taxable entity.

o. A partnership is a separate legal entity, but is not subject to federal income tax.

Answer 1

a. Statement is False. most of them includes vesting period

b. Statement is True. no rights until exercised

d. Statement is True (only for employees)

e. Statement is True. (for anyone)

f. Statement is True.

g. Statement is True.

Note: only 4 sub parts are allowed, more than that have been answered.