Test $-$ Employee Stock Plans $(2023)$

Noristatutory Stock Options

Question $1$ of $15.$

Quinn exercised a nonstatutory stock option on August $5,2022.$ He purchased $500$ shares of his company's stock for $$5,000.$ The fair market value of the stock at the time of purchase was $$7,500.$ He included the $$2,500$ difference between the fair market value and the purchase price as compensation income when he filed his $2022$ return. What is Quinn's basis in the underlying stock?

$$0$

$$2,500$

$$5,000$

$$7,500$