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:

James Hutton

Often referred to as the "Father of Modern Geology," he was an 18th-century Scottish scientist who proposed the principle of uniformitarianism.

Siccar Point

Siccar Point is a prominent geological site in Scotland known for its angular unconformity between older, tilted layers of rock and younger, horizontal layers.

Unconformity

A boundary where two different layers of rock meet, signifying a time when erosion occurred or new layers were not formed.

Original Horizontality

The principle that most sediments and many volcanic units are deposited in layers that originally are more or less horizontal.