Question: Refer to the facts in the preceding problem. Five years after Gogo granted the option to Mrs. Mill, she exercised it on a day when

Refer to the facts in the preceding problem. Five years after Gogo granted the option to Mrs. Mill, she exercised it on a day when Gogo stock was selling for $10.31 per share.
a. How much income must Mrs. Mill recognize in the year of exercise?
b. What is Gogo’s tax deduction in the year of exercise?
c. What is the effect of the exercise on Gogo’s book income and deferred taxes?

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