Wilson Corporation Granted an Incentive Stock Option to Reva on January

question 39

Multiple Choice

Wilson Corporation granted an incentive stock option to Reva on January 1,two years ago.The option price was $300,and the FMV of the Wilson stock was also $300 on the grant date.The option allowed Reva to purchase 150 shares of Wilson stock.Reva exercised the option on August 1,this year,when the stock's FMV was $400.Unless otherwise stated,assume Reva is a qualifying employee.The results of the above transactions to Reva will be

• A)no income to Reva on the grant date or exercise date but there is an alternative minimum tax adjustment item to Reva of $15,000.
• B)no income tax or alternative minimum tax effect for Reva.
• C)ordinary income to Reva on the exercise date of $15,000.
• D)capital gain to Reva on the exercise date of $15,000.

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Definitions:

Developmental Feedback

Constructive feedback provided to individuals to support their professional growth and development.

Subordinates' Behavior

The actions and interactions of employees directed by individuals in higher positions within the organizational hierarchy.

Faith-Based Businesses

Enterprises that are grounded in and operate according to the principles of a particular faith or religious set of beliefs, often integrating moral and ethical considerations into business practices.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for the work performed as required.