Pony, Inc, Issues Restricted Stock to Employees in July 2017, with with a Two-Year

Multiple Choice

Pony, Inc., issues restricted stock to employees in July 2017, with a two-year vesting period and an SRF. An employee must remain a full-time employee of Pony for two years after the restricted stock is issued. The stock is trading at $10 per share when the stock is issued. An employee, Sam, decides to make the § 83(b) election with his 1,000 shares. At the end of 2017, the stock is trading at $13 per share. How much income, if any, must Sam recognize in 2017?

A) $0.
B) $10,000 capital gain.
C) $10,000 ordinary income.
D) $13,000 capital gain.
E) $13,000 ordinary income.