Suzanne Received 20 ISOs (Each Option Gives Her the Right

question 107

Essay

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working, when the stock price was $13 per share. Three years later, when the share price was $23 per share, she exercised all of her options. If Suzanne holds the shares for two additional years and sells them when the market price is $30, how much gain will Suzanne recognize on the sale and how much tax will she pay, assuming her marginal tax rate is 37 percent?

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Definitions:

Free Will

The concept that humans have the ability to make choices that are not determined by prior causes or by divine intervention.

Conscious Mind

The aspect of the mind that is aware of thoughts, feelings, and surroundings at any given moment.

Behaviors

Behaviors are the actions or reactions of an individual or a system in response to external or internal stimuli.

Positron-Emission Tomography

An imaging technique that uses radioactive substances to visualize and measure changes in metabolic processes, and hence, the functioning of organs and tissues.