Piper Works for Moon Co

question 11

Multiple Choice

Piper works for Moon Co., which is a public corporation.Piper was granted a stock option in 2018 to purchase shares at $15 per share from the company when the fair market value was $17 per share.Piper exercised the option in 2020 and purchased 500 shares.The fair market value at that time was $21 per share.What is Piper's tax treatment of this option for the 2020 tax year?

• A)$1,000 taxable benefit and no security option deduction
• B)$1,000 taxable benefit and a 50% security option deduction
• C)$3,000 taxable benefit and no security option deduction
• D)$3,000 taxable benefit and a 50% security option deduction

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Definitions:

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