Question: Ellison exercised a non statutory stock option on May 3 1 , 2 0 2 3 . He paid $ 1 6 , 0

Ellison exercised a non statutory stock option on May 31, 2023. He paid $16,000 for 100 shares of his company's stock. The fair market value of the shares on that date was $20,000. Although Ellison continues to hold these shares, he included the $4,000 difference between the fair market value and the purchase price as compensation income when he filed his 2023 return. What is Ellison's basis in the stock? Explain.

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