1. Complete the questions listed below relating to ACMETEK Corp for its employee, Brian Bee. For each...
Question:
1. Complete the questions listed below relating to ACMETEK Corp for its employee, Brian Bee. For each event of each problem, indicate if this is a taxable event, amount of taxable income and character of the income. Also indicate the starting date for the holding period of the underlying stock. (Note: Ignore AMT for all problems)
A. ACMETEK issued Incentive Stock Options (ISO) to Brian as follows:
a. July 1, 2017 - Granted 100,000 ISO’s (Exercise price = $1/share & FMV =$1/share).
b. June 15, 2018 – Exercised his 100,000 ISO’s (FMV of stock = $6/share)
c. October 20, 2019 – Sold 100,000 shares of stock (Proceeds = $31/share)
B. ACMETEK issued Non-Qualified Stock Options (NQ) to Brian as follows:
a. July 1, 2017 - Granted 200,000 NQ’s (Exercise price = $1/share & FMV = $1/share).
b. June 15, 2018 – Exercised her 200,000 NQ’s (FMV of stock = $21/share)
c. October 20, 2019 – Sold 200,000 shares of stock (Proceeds = $51/share)
C. ACMETEK issued Stock (without any restrictions) to Brian as follows:
a. July 1, 2017 - Granted 400,000 shares (FMV = $2/share).
b. October 20, 2019 – Sold 400,000 shares of stock (Proceeds = $12/share)
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso