Yvonne Exercises Incentive Stock Options (ISOs) for 100 Shares of Apple

question 53

Multiple Choice

Yvonne exercises incentive stock options (ISOs) for 100 shares of Apple Corporation stock at the option price of $100 per share on May 21, 2019, when the fair market value is $120 per share.She sells the 100 shares of stock 3 1/2 years later for $140.Determine the recognized gain on the sale and classify it as capital or ordinary.

• A)$2,000 LTCG.
• B)$2,000 ordinary income.
• C)$4,000 LTCG.
• D)$4,000 ordinary income.
• E)None of these.

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Definitions:

Number Of Sales

quantifies the total sales transactions completed within a specific period, often used to gauge business performance.

Bonus

A form of additional compensation given to an employee or workers, above their normal pay, for achieving a certain level of performance or for special occasions.

Commission

A fee paid to an agent or employee for facilitating a sale or transaction, typically calculated as a percentage of the sale.

Car Dealer

An organization that specializes in selling new or pre-owned automobiles directly to consumers, operating under a dealership agreement with a car manufacturer or its sales division.