Calculate the adjusted cost base of the shares: Option price: $15 per share FMV of the shares when the options were exercised: $17 per share Bargain element: $15 - $17 = -$2 per share Number of shares acquired: 500 Adjusted cost base of the shares: -$2 * 500 = -$1,000 Calculate the capital gain on the sale of the shares: Proceeds from the sale: $24 per share * 500 shares = $12,000 Adjusted cost base of the shares: -$1,000 Capital gain: $12,000 - (-$1,000) = $13,000 Calculate the taxable benefit from the exercise of the options: Benefit from the exercise of the options: ($17 - $15) * 500 = $1,000 50% of the benefit: $1,000 * 0.5 = $500 Therefore, the net effect of the transactions on Mr. Morra's 2022 taxable income is an increase of -$1,000 (the adjusted cost base of the shares) + $500 (the taxable benefit from the exercise of the options) = -$500. Therefore, the effect of the above transactions on Mr. Morra's 2022 taxable income is an increase of $500