Restricted stock is stock given to an employee or which is sold to an employee at a discount. The employee is typically prohibited from selling or otherwise disposing of the stock for a defined period.
A recipient of a restricted stock award may elect to include in his gross income the fair market value of the shares on the date of grant within 30 days of grant (rather than waiting for the attribution of income until the restrictions lapse), with the amount of the income based on the fair market value of the shares at that time. The fair market value of the stock reported as income is not reduced for the restrictions on the stock (unless there is a permanent limitation on the transfer of the stock that requires you to resell the stock to your employer at a price determined by a formula).
