Alice Bee, age 63, is a participant in the stock bonus plan of her employer, a closely held company. She received contributions in shares to the stock bonus plan and her employer took income tax deductions as follows:
Year # of Shares Value per share at time of contribution
2014 100 $25
2015 200 $30
2016 200 $32
She terminates employment and takes a distribution from the plan of 500 employer shares having a fair market value of $20,000. What are the tax consequences to Alice Bee?
a) There are no immediate tax consequences because she has not sold the stock.
b) She has ordinary income of $14,900 at distribution.
c) She has net unrealized appreciation of $14,900.
d) She has ordinary income of $20,000 at distribution.