Kaijsa Received 20 NQOs (Each Option Gives Her the Right

question 52

Essay

Kaijsa received 20 NQOs (each option gives her the right to purchase 30 shares of stock for $8 per share)from her employer at the time she started working, when the stock price was $9 per share. Now that the share price is $18 per share, she intends to exercise all of her options. If Kaijsa holds the shares for two years and sells them when the market price is $25, what is the amount of the deduction and tax savings her employer will receive (assume the employer's marginal tax rate is 21 percent)?

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Definitions:

Accepted Goods

Items that have been received and approved by a buyer, indicating satisfaction with their condition according to the terms of the purchase agreement.

Repudiated the Contract

A situation where one party refuses to fulfill their obligations under the contract, effectively renouncing or rejecting it.

Contract Obligations

Duties that are legally binding and arise from agreements made between parties to perform or refrain from performing certain acts.

Maximum Time Period

The top limit or longest duration that something can continue or be in effect, often specified by law or agreement.