In May 2012,Swallow,Inc

question 90

Essay

In May 2012,Swallow,Inc. ,issues options to Karrie,a corporate officer,to purchase 100 shares of Swallow stock under an ISO plan.At the date the stock options are issued,the fair market value of the stock is $1,000 per share and the option price is $1,200 per share.The stock becomes freely transferable in 2013.Karrie exercises the options in November 2012 when the stock is selling for $1,500 per share.She sells the stock in December 2014 for $1,800 per share. ​
a.Determine the amount of the AMT adjustment for 2012.
b.Determine the amount of the AMT adjustment for 2013.
c.​
Determine Karrie's recognized gain for regular income tax purposes and for AMT purposes in 2014 on the sale of the stock.
d.Determine the amount of the AMT adjustment for 2014.

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Definitions:

Profitability Of Capital

A measure of how effectively capital is used to generate profit, important for assessing the financial performance of businesses.

Economic-Organization Explanation

A rationale that describes phenomena or behaviors based on the structure and function of economic entities and their organizational contexts.

Remain Poor

A state wherein individuals or groups continue to live below the poverty line, unable to achieve economic mobility.

Two Years

A period of time equal to 24 months or 730 days, often used to measure medium-term durations.