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Augustus1 Augustus1
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7 years ago
Jackson Corporation granted an incentive stock option to employee Caroline on January 1, two years ago. The option price was $150, and the FMV of the Jackson stock was also $150 on the grant date. The option allowed Caroline to purchase 160 shares of Jackson stock. Caroline exercised the option on August 1, this year, when the stock's FMV was $250. Unless otherwise stated, assume Caroline is a qualifying employee. If Caroline sells the stock on July 5, next year for $400 per share, she must recognize
A) long-term capital gain of $40,000 next year.
B) a tax preference item of $16,000 this year and a long-term capital gain of $24,000 next year.
C) ordinary income of $16,000 on the exercise date and a long-term capital gain of $24,000 next year.
D) ordinary income of $16,000 next year and a short-term capital gain of $24,000 next year.
Textbook 
Prentice Hall's Federal Taxation: 2011: Individuals

Prentice Hall's Federal Taxation: 2011: Individuals


Edition: 14th
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We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer
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MsLippyMsLippy
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Augustus1 Author
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#2
7 years ago
Your explanation helped, amazing amazing!
We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer
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