Question: Yang is employed by a CCPC. In 2014, he was granted stock options to purchase 500 of his employer's shares for $10 per share. The

Yang is employed by a CCPC. In 2014, he was granted stock options to purchase 500 of his employer's shares for $10 per share. The shares were valued at $12 per share on the day he received the stock option. In 2016, when the shares were valued at $18 per share, he exercised the option and bought all 500 shares. He sold the shares in 2021 at the market price of $25 per share.

Required:

a) Calculate the impact as a result of the stock option on Yang's net income for tax purposes for each of 2014, 2016, and 2021. Explain the impact to net income for tax purposes for each year.

b) If Yang's employer were a public company rather than a CCPC, calculate the impact on Yang's net income tax purposes for each of 2014, 2016, and 2021. Explain the impact to net income for tax purposes for each year.

Step by Step Solution

★★★★★

3.42 Rating (149 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a For a CCPC Canadian Controlled Private Corporation 2014 The stock option benefit for 2014 is calcu... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Law Questions!

Abba Co. owns a 40% interest in Jay Ltd, a joint venture. Information for the two entities for the year ended July 31, 20X4, is as follows: Sales Net income Abba $5,000,000 1,500,000 Jay $3,900,000...

A bakery with a December 31 st year end purchased new equipment on October 31 st 2000 for $10,000. This was their first equipment purchase. Required: What are the tax consequences if the equipment is...

Jeff Jones is 44 years old and is employed by a Canadian public company. His annual salary is $112,468, none of which is commissions. Because of his outstanding work during 2019, he has been awarded...

Corporate governance issues surrounding the independence and conflict of interest within the board in Japan Land surfaced in 2009, following the successive resignations of its Deputy Managing...

John is employed by a CCPC. In 2014, he was granted stock options to purchase 500 of his employers shares for $10 per share. The shares were valued at $12 per share on the day he received the stock...

is an employee of a Canadian controlled private corporation ( CCPC ) . She is married to David, a stay - at - home husband with no income of his own. Abigail's 6 4 year - old mother who is infirm,...

Marvin Combs is 43 years old and is employed by a Canadian public company. His annual salary is $112,468, none of which is commissions. Because of his outstanding work during 2021, he has been...

Marvin Combs is 4 3 years old and is employed by a Canadian public corporation with gross revenues of $ 2 8 0 million. His annual salary is $ 1 1 2 , 4 6 8 , none of which is commissions. Because of...

Problem Four A Comprehensive Tax Payable ( 3 0 marks ) Marvin Combs is 4 3 years old and is employed by a Canadian public company with gross revenues of $ 2 8 0 million. His annual salary is $ 1 1 2...

Puja is a senior manager at Dundas Inc. a CCPC. She received the following amounts and benefits from her employer during 2020. 1. Salary, gross $140,000 Payroll deductions: Income taxes $38,000...

How did the American Revolution express popular democratic ideals? Which of these ideals have endured?

A random variable is equally likely to take on any integer value in the set {0, 1, 2, 3}. (a) Sketch the CDF of X fx (x). (b) Write fx (x) analytically in terms of unit step functions.

Question 3 ( 2 points ) How does advertising change from the first to the second stage of the product life cycle? a ) It changes to inelastic demand promotion. b ) It changes to a secondary promotion...

Lakeside Hospital is a division of Superior Healthcare that is organized as an investment center. In the past year, the hospital reported an after-tax income of $3,500,000. Total interest expense was...

EK Chemical Company sells a specialty chemical in pack ages marked 100 g. In reality, EK has set the process mean at 100.5 g, and the process currently has a standard deviation of 0.50 g. Suppose the...

Consider the following problem. Minimize Z = 2x1 + 3x2 + 2x3, Subject to And x1 ¥ 0, x2 ¥ 0, x3 ¥ 0. Let x4 and x6 be the surplus variables for the first and second constraints,...

(a) Use the northwest-corner method to find an initial feasible solution to the following problem. What must you do before beginning the solution steps? (b) Use the intuitive lowest-cost approach to...

Davenport Mills is a division of Iowa Woolen Products. For the most recent year, Davenport had net income of $20,000,000. Included in income was interest expense of $1,400,000. The operation's tax...

What is a potential risk associated with personal secured debt? Increased borrowing capacity Losing the collateral if you do not repay the loan Lower interest rates Reduced overall loan cost

Lancers Inc. is involved in five separate industries. The following information is available for each of the five industry segments. Instructions Determine which of the operating segments are...

Morgan Sondgeroth Inc. began operations in January 2012 and reported the following results for each of its 3 years of operations. 2012 .... $260,000 net loss 2013 ... $40,000 net loss 2014 . $800,000...

What effect do stock dividends or stock splits have on the computation of the weighted-average number of shares outstanding?

The model you found in Exercise 22 is a relationship noted in the 17th century by Kepler as his Third Law of Planetary Motion. It was subsequently explained as a consequence of Newton's Law of...

The data in the next column list the Life Expectancy for white males in the United States every decade during the past 110 years (1 = 1900 to 1910, 2 = 1911 to 1920, etc.). Create a model to predict...

In Exercise 28 you examined the record weight-lifting performances for the Olympics. You found a re-expression of Total Weight Lifted. a) Find a model for Total Weight Lifted by re-expressing Weight...