Orange Computer Inc. grants Steve Werks 10,000 incentive stock options (ISOs) on January 1, Year 1 (the "grant" date). On this date, the stock's fair market value is $100 per share and each ISO entitles the holder to buy one share of Orange stock for $100 (the exercise price). Steve exercises the ISOs on December 31, Year 5 (the "exercise" date) when the stock is worth $300 per share. What are the tax consequences if, in Year 7, Steve sells the stock in a qualifying disposition for $500 per share?