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:

Full-Employment Economy

An economic condition in which virtually all who are able and willing to work are employed.

Network Structures

refer to the arrangement of connections and relationships between individuals, groups, or institutions, often used to describe organizational or social networks.

Delegation

The process of assigning responsibility and authority to subordinates to complete a task, while maintaining accountability for the outcome.

Matrix Structures

An organizational structure that combines two or more lines of reporting, typically function and product, to more effectively manage complexity.