Mirasol Corporation Granted an Incentive Stock Option to Employee Josephine

question 2

Multiple Choice

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago.The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date.The option allowed Josephine to purchase 160 shares of Mirasol stock.Josephine exercised the option this year when the stock's FMV was $250.Unless otherwise stated,assume Josephine is a qualifying employee.The results of the above transactions to Mirasol Corporation will be

• A)no compensation deduction.
• B)a compensation deduction of $16,000 on the grant date.
• C)an alternative minimum tax adjustment item of $16,000 on the exercise date.
• D)a compensation deduction of $16,000 on the exercise date.

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Definitions:

True To

Remaining faithful or loyal to a cause, idea, or mission; upholding certain values or standards without deviation.

Self-Image

How a person sees him- or herself.

Highly Technical

Relating to or requiring specialized knowledge or skills in a field, especially in science or engineering.

Avoided

Refers to actions or situations that are deliberately not engaged with or confronted.