Maren Received 10 NQOs (Each Option Gives Her the Right

question 60

Multiple Choice

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share.When the share price was $15 per share,she exercised all of her options.Eighteen months later she sold all of the shares for $20 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 39.6 percent?

• A) $0 gain and $0 tax.
• B) $500 gain and $100 tax.
• C) $500 gain and $175 tax.
• D) $1,200 gain and $180 tax.

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Definitions:

Perceptual Abilities

The capacity to interpret, analyze, and give meaning to sensory information.

Concrete Operational

A stage in Piaget's theory of cognitive development where children gain the ability to think logically about concrete events and understand the concept of conservation.

Piagetian Theory

Piagetian Theory refers to the cognitive development theory proposed by Jean Piaget, which suggests that children move through four stages of mental development.

Mental Structures

Conceptual frameworks or patterns of thinking that individuals use to process and organize information.