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

question 65

Essay

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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Inverted Pyramid

A writing structure used in journalism that presents the most important information first, followed by lesser details.

Similes

Figures of speech that compare two different things using "like" or "as" to highlight similarities.

Scope

The extent or range of view, outlook, application, operation, or effectiveness.

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