In 2011, BB granted an incentive stock option (ISO) to Mr. Yarnell to buy 7,000 shares of
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Question:
In 2011, BB granted an incentive stock option (ISO) to Mr. Yarnell to buy 7,000 shares of BB stock at $8.50 per share for 10 years. At date of grant, BB stock was trading on the AMEX for $8.09 per share. In 2020, Mr. Yarnell exercised the option when BB’s stock was trading at $24.27 per share.
Required:
- How much income did Mr. Yarnell recognize in 2011 and 2020 because of the ISO?
- Compute Mr. Yarnell’s basis in the 7,000 shares.
- What are the tax consequences of the stock option to BB in 2011 and 2020?
Related Book For
Principles Of Taxation For Business And Investment Planning 2016 Edition
ISBN: 9781259549250
19th Edition
Authors: Sally Jones, Shelley Rhoades Catanach
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