In the Current Year, Employee F Is Given an Incentive

question 43

Multiple Choice

In the current year, employee F is given an incentive stock option (ISO) entitling him to purchase 100 shares of his employer Sigma Corporation's stock for $50 per share.He exercises the option in the following year when the shares are selling for $80 per share.If F sells these 100 shares four years later for $200 per share, he will recognize

• A)A long-term capital gain of $120 per share
• B)A long-term capital gain of $150 per share
• C)Ordinary income of $30 per share and a long-term capital gain of $120 per share
• D)No income upon sale