Joe received 500 stock options (to purchase 1 share each) from his work on Jan 1, 2016.
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Question:
Joe received 500 stock options (to purchase 1 share each) from his work on Jan 1, 2016. The options vest Jan 1, 2021. The exercise price is $25 per share. On Jan 1, 2021, Joe exercises all of the options and purchases 500 shares. The shares were trading at $42 per share on the exercise date. Joe holds the stock until April 1, 2023 when he sells all shares for $52 per share.
- If the options are incentive stock options, calculate the amount of income that is included in AGI on the grant date, exercise date, and date of sale. Indicate character of any income.
- If the options are nonqualified stock options, calculate the amount of income that is included in AGI for on the grant date, exercise date, and date of sale. Indicate character of any income.
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