Yvonne Exercises Incentive Stock Options (ISOs)for 100 Shares of Apple

question 74

Multiple Choice

Yvonne exercises incentive stock options (ISOs) for 100 shares of Apple Corporation stock at the option price of $100 per share on May 21,2016,when the fair market value is $120 per share.She sells the 100 shares of stock 3 1/2 years later for $140.Determine the recognized gain on the sale and classify it as capital or ordinary.

• A)$2,000 LTCG.
• B)$2,000 ordinary income.
• C)$4,000 LTCG.
• D)$4,000 ordinary income.
• E)None of the above.

Determine the tax implications of inheriting or gifting stock.

Analyze the tax consequences of selling assets held for business versus personal use.

Calculate net investment income and the related surtax.

Identify the distinctions between ordinary income and capital gains.

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Definitions:

Scatter Diagram

A type of graph used in statistics to visually display and compare two or more variables to identify patterns, relationships, or trends.

Linear Model

A mathematical model that assumes a linear relationship between the independent and dependent variables.

Sales

The exchange of goods or services for money, constituting a primary activity for commercial businesses.

Scatter Diagram

A type of graph used in statistics to display values for two variables for a set of data, showing the relationship between the variables.