This year, Faro Incorporated, a calendar year taxpayer, issued 500 shares of its publicly traded stock as a bonus to its employee, Mrs. Doyle. On the date of issuance, the stock’s fair market value was $17,900. Required:

What are the tax consequences to Mrs. Doyle and Faro if Mrs. Doyle’s ownership of the stock was fully vested on the date of issuance (the stock was transferable and not subject to risk of forfeiture).

What are the tax consequences to Mrs. Doyle and Faro if Mrs. Doyle can’t dispose of the stock before July 1, 2025, and if she quits her job with Faro before that date, she must forfeit the stock back to Faro. Mrs. Doyle made no election with respect to the restricted stock.