Maren Received 12 NQOs (Each Option Gives Her the Right

question 64

Multiple Choice

Maren received 12 NQOs (each option gives her the right to purchase 7 shares of stock for $10 per share) at the time she started working when the stock price was $8 per share. When the share price was $20 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $23 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

• A)$0 gain and $0 tax
• B)$252 gain and $50 tax
• C)$252 gain and $93 tax
• D)$1,092 gain and $218 tax

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