Hazel Received 20 NQOs (Each Option Gives Her the Right

question 99

Essay

Hazel received 20 NQOs (each option gives her the right to purchase 10 shares of stock for $7 per share) at the time she started working when the stock price was $14 per share. Now that the share price is $20 per share, she intends to exercise all of her options. If Hazel holds the shares for two years and sells them when the market price is $25, how much gain will Hazel recognize on the sale and how much tax will she pay assuming her marginal tax rate is 37 percent?

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Definitions:

SWOT Analysis

A strategic planning tool used to identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning.

Weaknesses

Attributes or areas that require improvement to reach desired goals or to maintain competitiveness.

Strategy

A high-level plan or set of actions designed to achieve long-term or overall goals under conditions of uncertainty.

Opportunities

Circumstances or situations that present potential for growth, development, or success.