Martin Corporation Granted a Nonqualified Stock Option to Employee Caroline $$\begin{array} { | l | l | } \hline 2018 & 2019 \\\hline 100,000 \text { ordinary income } & \$ 50,000 \text { LTCG } \\\hline\end{array}$$

question 10

Multiple Choice

Martin Corporation granted a nonqualified stock option to employee Caroline on January 1,2014.The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 1,000 shares of Martin stock.The option itself does not have a readily ascertainable FMV.Caroline exercised the option on August 1,2018,when the stock's FMV was $250.If Caroline sells the stock on September 5,2019,for $300 per share,she must recognize

• A) \[\begin{array} { | l | l | }
• \hline 2018 & 2019 \\
• \hline 100,000 \text { ordinary income } & \$ 50,000 \text { LTCG } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline 2018 & 2019 \\
• \hline 0 & \$ 150,000 \text { LTCG } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline 2 018 & 2019 \\
• \hline 100,000 \text { ordinary income } & \$ 50,000 \text { ordinary income } \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline 2018 & 2019 \\
• \hline 0 & \$ 150,000 \text { ordinary income } \\
• \hline
• \end{array}\]

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Definitions:

Empathy

The ability to understand and share the feelings of another, enabling a deeper connection and emotional support in relationships.

Ohio State Studies

A series of studies that identified two critical dimensions of leadership behavior: consideration (focus on welfare of subordinates) and initiating structure (organizing work tasks and roles).

Initiating Structure

A leadership behavior that involves setting clear goals, defining role expectations, and establishing well-defined patterns of organization and communication within a group.

Consideration

The regard for or consideration of the needs, feelings, beliefs, or wishes of others.