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What compensation deduction is Andro Corporation allowed

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Problem - On May 31, 2014, Andro Corporation sold 500 shares of its stock to Nombeko, an employee, for $100 per share. No special election is made. At the time of the sale, the fair market value of the stock was $200 per share. Under the terms of the sale, each share of stock was nontransferable and subject to a substantial risk of forfeiture (which was not to lapse until May 31, 2019). Evidence of these restrictions was stamped on the face of the stock certificates. On May 31, 2019, the fair market value of the stock was $400 per share.

Required -

a. What amount is Nombeko required to include as income in 2019?

b. What compensation deduction is Andro Corporation allowed?

Reference no: EM132673232

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