Restricted stock is common stock that is subject to vesting (usually over time, occasionally upon milestone events). More information about vesting can be found here. Companies can charge recipients for shares of restricted stock or give them to recipients for free (or in exchange for past or future services). If a startup sells shares below their fair market value (FMV), the difference between the purchase price and the FMV is taxable income to the recipient. If shares are issued for free, the recipient must count the FMV of the shares as taxable income.