[Individual]Restricted Property and Stock Options (Feb-25-2011, 53 days left)

If you received a property for your services, you should include its fair market value in your income.

If you received restricted property (such as stock which has certain restrictions that affect its value), you do not include it in your income until it has substantially vested. ( you can choose to include in your income once the property is transferred to you.)

Dividends received on restricted stock before you include them in your income: treated as compensation, not as dividend income. It should be included in your W-2.

Dividends received on restricted stock after you choose to include in your income when transfer: treated as dividends.

Stock Options:

Nonstatutory Option	Usually will have income when you receive the option, exercise the option, or sell or dispose of stock option
Statutory Option	Income happens when you sell or exchange your stock.

See Pub 525 for more details.

PSQ

Source: http://www.irs.gov