Bell Corporation grants an incentive stock option to Peggy, an employee, on January 1, 2023, when the option price and FMV of the Bell stock is \($80.\) The option entitles Peggy to buy 10 shares of Bell stock. Peggy exercises the option and acquires the stock on April 1, 2025, when the stock’s FMV is \($100.\) Peggy, while still employed by the Bell Corporation, sells the stock on May 1, 2027, for \($120\) per share.

a. What are the tax consequences to Peggy and Bell Corporation on the following dates: January 1, 2023; April 1, 2025; and May 1, 2027? (Assume all incentive stock option qualification requirements are met.)

b. How would your answer to Part a change if Peggy instead sold the Bell stock for \($130\) per share on May 1, 2025?