Maren Received 10 NQOs (Each Option Gives Her the Right

question 42

Multiple Choice

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Marenrecognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 39.6 percent?

• A) $500 gain and $175 tax.
• B) $0 gain and $0 tax.
• C) $500 gain and $100 tax.
• D) $1,200 gain and $180 tax.

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Definitions:

Conduct Problems

Behavioral and emotional issues in children and adolescents, characterized by actions that violate societal norms or the rights of others.

Introvert

a person with a personality trait or type characterized by a focus on internal feelings rather than external sources of stimulation.

Nature And Nurture

The debate concerning the relative importance of an individual's innate qualities versus personal experiences in determining or causing differences in physical and behavioral traits.

Genetics

The branch of biology that studies genes, heredity, and the variation of organisms.