Suzanne Received 20 ISOs (Each Option Gives Her the Right

question 65

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 10 additional months 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 35 percent?

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Definitions:

Initiative Versus Guilt

A stage of Erik Erikson's theory of psychological development where children aged roughly 3-5 years balance eagerness to attempt new tasks with the risk of feeling guilty for unintended consequences.

Cohesive Identity

The sense of being a unique person with a unified sense of self across different contexts and over time.

Identity Crisis

A period of uncertainty, confusion, or questioning regarding one's sense of self and personal identity, often occurring during adolescence or significant life transitions.

Optimism

A mental attitude characterized by hope and confidence in positive outcomes or the future.