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On January 1,2013,Gail (An Executive)receives a Warrant to Purchase One

question 58

Essay

On January 1,2013,Gail (an executive)receives a warrant to purchase one share of stock at $70 and on the same date the fair market value of the stock is $100.The warrant has no restrictions and has a readily ascertainable fair market value on a stock exchange of $30.She exercises the warrant on May 15,2013,and sells the stock for $200 on December 20,2016.
a.Calculate the amount Gail would recognize in 2013,if any.
b.Calculate the amount Gail would recognize in 2016,if any.
c.Suppose she sells the warrant in 2017 for $39.What amount would Gail recognize?


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