Patrick was granted a stock option in September 2010 under his employers non statutory stock option plan.
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Patrick was granted a stock option in September 2010 under his employer’s non statutory stock option plan. Patrick was granted an option to purchase 10,000 shares at $70 per share, the market price at the time of the grant. Patrick exercises the option in February 2012, purchasing 5,000 shares. The market price of the stock is $80 per share at the time of exercise. Patrick sells the shares in May 2013 at a price of $100 per share. Patrick is in the 25% tax bracket.
What is the taxable compensation for Patrick at the time he exercises the option?
Related Book For
Principles of Taxation for Business and Investment Planning 2019 Edition
ISBN: 9781260161472
22nd edition
Authors: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
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