Maren Received 10 NQOs (Each Option Gives Her the Right

question 59

Multiple Choice

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working, when the stock price was $6 per share.When the share price was $15 per share, she exercised all of her options.Eighteen months later she sold all of the shares for $20 per share.How much gain will Maren recognize on the sale and how much tax will she pay, assuming her marginal tax rate is 35 percent?

• A)$0 gain and $0 tax.
• B)$500 gain and $75 tax.
• C)$500 gain and $175 tax.
• D)$1,200 gain and $180 tax.

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Definitions:

Disciplined

Exhibiting self-control and behavior in accordance with rules or standards, often to achieve long-term goals.

Feared Self

An aspect of self-concept involving the representation of the person one is afraid of becoming, often including traits or characteristics viewed negatively.

Societal Norm

Implicit or explicit rules that are accepted and enforced by a community or society, guiding individual behavior and promoting social cohesion.

Gender Identity

An individual's personal sense of their own gender, which may or may not correspond with the sex they were assigned at birth.