Martin Corporation Granted a Nonqualified Stock Option to Employee Caroline

question 65

Multiple Choice

Martin Corporation granted a nonqualified stock option to employee Caroline on January 1,2015.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 1,2019,when the stock's FMV was $250.Caroline sells the stock on September 5,2020,for $300 per share.Martin Corporation will be allowed a deduction of

• A)$150,000 in 2015.
• B)$100,000 in 2019.
• C)$50,000 in 2020.
• D)$100,000 in 2019 and $50,000 in 2020.

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Definitions:

Common Law

A legal system based on court precedents and judicial decisions rather than statutory laws, providing a framework for adjudicating cases.

Court-Made

Refers to legal doctrines, laws, or interpretations that have been established by judicial rulings rather than by legislative statutes.

Holding

A court's determination of a matter of law pivotal to its decision, serving as an authoritative ruling.

Court's Decision

The formal judgment or ruling issued by a court following the conclusion of a legal case.