Antonio received 40 ISOs at the time he started working for Zorro Corporation six years ago (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share). Zorro’s share price was $3 per share at the time. Now that Zorro’s share price is $50 per share, he intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. 

a. What are Antonio’s tax consequences on the grant date, the exercise date, and the date the shares are sold assuming his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?

b. What are Zorro’s tax consequences on these dates assuming its marginal tax rate is 21 percent?

c. What are the cash flow effects of these transactions to Antonio assuming his ordinary marginal rate is 24 percent and his long-term capital gains rate is 15 percent? 

d. What are the cash flow effects to Zorro Corporation resulting from Antonio’s option exercise if Zorro’s marginal tax rate is 21 percent?