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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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If an officer of a public company purchases stock at a

Customer Question

If an officer of a public company purchases stock at a bargain price in May, but later in August s bound by a lock-up agreement and prohibited from selling the stock, is the purchase of the stock taxable. For example, the Officer buys 100,000 shares at $1.00 in May and pays $100,000, but the stock is valued and trading on the date of purchase equal to $4.00/share or $400,000. In August, the Officer is asked and signs an agreement that restricts the stock. In May, the stock was not considered restricted at the time of issuance. At the time of purchase there was a $300,000 difference between the bargain price and the market price. Is it true that if restricted on the date of issuance, it would not be taxable? If it happened in the same year, will the event be taxable, or does the subsequent restriction cause it to be non-taxable. What happens in the future?
JA: The Expert will know how to help. Is there anything else the Expert should be aware of?
Customer: No
Submitted: 1 month ago.
Category: Tax
Customer: replied 1 month ago.
It this being reviewed? I paid. Seems to have been lost
Expert:  PDtax replied 1 month ago.

Hi from Just Answer. I'm PDtax, a US CPA, and can research the issue and advise.

Let's confirm this is a US tax issue for a US citizen. Then I can help, and will send you an offer for the research time.


Customer: replied 1 month ago.
It is for a U.S. Corporation for a U.S. Taxpayer (Citizen). Pre-Paid
Expert:  PDtax replied 1 month ago.

See my offer for the research time.

Customer: replied 1 month ago.
REJECT YOUR OFFER. I was asked to pay up front based upon my question. The price was actually higher then I have ever paid and now you want more. Please cancel and immediately refund my deposit. I think JustAnswer is playing "bait and switch" here and just don't appreciate it. AGAIN PLEASE CANCEL and REFUND MY DEPOSIT IMMEDIATELY.