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Ruby Corporation Grants Stock Options to Iris on February 1,2015

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Ruby Corporation grants stock options to Iris on February 1,2015.The options do not have a readily ascertainable value.The option price is $100,and the FMV of the Ruby stock is also $100 on the grant date.The option allows Iris to purchase 200 shares of Ruby stock.Iris exercises the option on August 1,2016,when the stock's FMV is $150.Iris sells the stock on December 5,2017 for $400.Determine the amount and character (i.e.ordinary,LTCG or STCG)of income recognized by Iris and the deduction allowed Ruby Corporation in 2015,2016 and 2017 under the following assumptions:
a.The stock option is an incentive stock option.
b.The stock option is a nonqualified stock option.


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