In 2008,Merlin Received the Right to Acquire 1,200 Shares of Noble

question 78

Multiple Choice

In 2008,Merlin received the right to acquire 1,200 shares of Noble Corporation stock through the company's incentive stock option plan at an exercise price of $17 per share.On January 4,2012,Merlin exercises the option when the fair market value of the stock is $22 per share.Which of the following is(are) correct statements?
I.Noble can deduct $6,000 as compensation expense in 2012.
II.Merlin does not recognize any income but must include $6,000 as a tax preference item in computing his alternative minimum taxable income.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Fourteenth Amendments

An amendment to the U.S. Constitution, ratified in 1868, that grants citizenship to all persons born or naturalized in the United States and ensures equal protection under the laws.

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Timber And Stone Act

A U.S. law passed in 1878 that allowed individuals to buy specific land from the government at a low price if it was deemed "unfit for cultivation" and valuable for timber and stone.