$1.$ On June $15,2024,$ Karen is granted $5,000$ Incentive Stock Options $($ISOs$)$ at an exercise price of $$20.$ The market price of the stock at the time the options are granted is $$20.$ On September $30,2025,$ she exercises the options when the price of the stock is $$29.$ On December $28,2028,$ she sells the stock for $$53$ per share.$$

$*$Note: For the calculations below, you will not need to calculate the actual tax owed $($as I have not given you Karen$$s marginal tax bracket or overall income$).$ Rather you are just calculating the amount that would be included in income and what type $($regular income, short term capital gain, long term capital gain, or AMT$).$

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a$.$ What are the tax consequences at grant? $(5$ points$)$

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b$.$ What are the tax consequences at exercise $($regular and$/$or AMT$)?($Show your calculations.$)(5$ points$)$