Ruby Corporation Grants Stock Options to Iris on February 1,2014

question 88

Essay

Ruby Corporation grants stock options to Iris on February 1,2014.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 1,2015,when the stock's FMV is $150.Iris sells the stock on December 5,2016 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 2014,2015 and 2016 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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REM Rebound

The phenomenon where a person experiences increased REM sleep after being deprived of REM sleep for a period.

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A chronic sleep disorder characterized by overwhelming daytime drowsiness and sudden attacks of sleep, often associated with cataplexy and other REM sleep disturbances.

Psychologically Meaningless

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Sexual Tension

describes the mutual feelings of attraction and desire often experienced between individuals, particularly when they resist physical intimacy.