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:

Clinical Interview

A research method in which questions are tailored to the individual, with each question depending on the answer to the preceding one.

Microgenetic Design

A research method that involves the detailed and frequent observation and analysis of changes in a behavior or ability as it is being learned, capturing the process of learning or development.

Developmental Change

Transformations or transitions in the physical, cognitive, social, and emotional domains of an individual across their lifespan.

+.50 Correlation

A statistical measure that indicates a moderate positive relationship between two variables, meaning as one variable increases, the other variable tends to also increase to some extent.