Suzanne Received 20 ISOs (Each Option Gives Her the Right

question 107

Essay

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working, when the stock price was $13 per share. Three years later, when the share price was $23 per share, she exercised all of her options. If Suzanne holds the shares for two additional years and sells them when the market price is $30, how much gain will Suzanne recognize on the sale and how much tax will she pay, assuming her marginal tax rate is 37 percent?

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Definitions:

Outgoing

Being sociable and willing to engage in conversation or activities with others.

Impression Management

The process by which individuals attempt to influence the perceptions of others about a person, object, or event by regulating and controlling information in social interactions.

Swiss Banking

A term denoting the prestigious, secure, and confidential banking system of Switzerland known for its privacy policies.

Projection

in a psychological context, refers to the process of displacing one's feelings onto a different person, animal, or object.