Martin Corporation Granted an Incentive Stock Option to Employee Caroline

question 108

Multiple Choice

Martin Corporation granted an incentive stock option to employee Caroline on January 1,2011.The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 160 shares of Martin stock.Caroline exercised the option on August 1,2013 when the stock's FMV was $250.Unless otherwise stated,assume Caroline is a qualifying employee.If Caroline sells the stock on September 5,2014 for $350 per share,she must recognize (ignore alternative minimum tax)

• A)0)No gain or loss is recognized at exercise or sale with incentive stock options.
• B)long-term capital gain of $16,000 in 2014.
• C)ordinary income of $16,000 on the exercise date and a long-term capital gain of $16,000 in 2014.
• D)long-term capital gain of $32,000 in 2014.

---

Definitions:

Blood Tests

Laboratory analyses performed on a blood sample to evaluate health status, diagnose diseases, or monitor medical conditions.

Coagulation Studies

Medical tests that evaluate the blood’s ability to clot properly, crucial for diagnosing bleeding disorders.

Blood Glucose Test

A medical test that measures the concentration of glucose in a person's blood, commonly used to diagnose and manage diabetes.

Tourniquet

A device used to apply pressure to a limb or extremity to control blood flow during medical emergencies or surgical procedures.