Restricted Stock Grants

[S T]

T/p was furnished the following info.
""When you receive your restricted stock grant under the Management Bonus Plan, it is not immediately taxable. However, the grant will become taxable when the restriction lapses 2 years from the grant date. If you prefer, you can elect to be taxed immediately on the receipt of the restricted stock""

I have not dealt with these before. Is there an advantage to being taxed immediately as opposed to the later date of 2 years laspe time? I would presume tax immediately if t/p can adjust income to lower in the year received, then having it taxed later.

Thoughts and experience would be welcomed.

Thanks
Sandy

[Dennis V]

Stock grants

It also affects the holding period. If they recognize the income immediately, then when the restrictions are lifted, they can sell some of the stock as long term capital gains, without having to wait another year.

You also want to consider the likelihood of the stock appreciating. If they recognize the income now, and the stock depreciates over two years, they will have paid tax on phantom profit.