Maren Received 10 NQOs (Each Option Gives Her the Right

question 59

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 and how much tax will she pay, assuming her marginal tax rate is 35 percent?

• A)$0 gain and $0 tax.
• B)$500 gain and $75 tax.
• C)$500 gain and $175 tax.
• D)$1,200 gain and $180 tax.

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Definitions:

Decoding Ability

The skill or capability to interpret and understand messages or signals correctly.

Display Rule

Cultural norms that dictate the appropriate emotional responses to situations.

Feeling Rule

Social norms that dictate the appropriate emotions to be expressed in different situations, influencing how individuals manage their emotional responses.

Independent Self

A psychological concept referring to individuals who define themselves in terms of their personal attributes, achievements, and goals.