On July 1, 2011, Howard is granted the right to acquire 500 shares of Matoney Corporation stock for $15 per share. The option qualifies under the company’s incentive stock option plan. The current fair market value of the stock is $12. On August 18, 2012, when the stock is selling for $18 per share, Howard exercises his option to purchase the stock. He sells the shares on September 15, 2013, for $29 per share. Determine the tax consequences for Howard and Matoney Corporation on the

a. Date of grant

b. Date of exercise

c. Date of sale

Assume that Howard sells the stock on August 15, 2013, for $27 per share. What are the tax consequences to Howard and Matoney Corporation?