On May 10,2011,Rafter Corporation Granted Peter an Option to Acquire

question 83

Multiple Choice

On May 10,2011,Rafter Corporation granted Peter an option to acquire 500 shares of the company's stock for $10 per share.The fair market price of the stock on the date of grant was $12.The fair market value of the option at the date of grant was $3.Peter exercises the option on July 1,2013,when the fair market value of the stock is $20.How much income must Peter report at the date of exercise?

• A)$ -0-
• B)$1,200
• C)$1,800
• D)$3,600
• E)$5,400