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(Solved by Expert Tutors) Santini?s new contract for 2014 indicates the following compensation and


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??Benefit Description Amount
??Salary $ 130,000 ?
??Health insurance ? 9,000 ?
??Restricted stock grant ? 2,500 ?
??Bonus ? 5,000 ?
??Hawaii trip ? 4,000 ?
??Group-term life insurance ? 1,600 ?
??Parking ($275 per month) ? 3,300 ?

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Santini is 54 years old at the end of 2014. 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, 2014, 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 2013. The group-term life policy gives him $150,000 of coverage. Assume that Santini does not itemize deductions for the year. Assume that Santini makes a section 83(b) election.

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Determine Santini's taxable income and?income tax liability for 2014. Use Tax rate schedule and Exhibit 12-10. (Round your answer to the nearest whole dollar amount.)


 


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Apr 19, 2020

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