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

question 86

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, 2017, 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.

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Definitions:

Senility

A derogatory term once used to describe the symptoms of dementia, characterized by a decline in cognitive function and memory.

Over-The-Counter

Refers to drugs and medications that can be purchased without a prescription.

Prescription Medicines

Drugs that legally require a medical prescription to be dispensed, typically for treating specific medical conditions.

Strange Situation

A procedure developed by Mary Ainsworth in the 1970s to observe attachment relationships between a caregiver and child by watching the child's behavior when introduced to a new environment, separated from the caregiver, and then reunited.