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

question 29

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 holds the stock for only two years and sells the shares for $115 per share. Determine the recognized gain on the sale and classify it as capital or ordinary.

• A)$2,000 ordinary income and $2,000 STCG.
• B)$2,000 ordinary income and $2,000 LTCG.
• C)$4,000 ordinary income.
• D)$1,500 LTCG.
• E)None of the above.

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Definitions:

Transgenic Animals

Animals genetically modified to carry genes from other species, often used in scientific research to study diseases, genetics, and the effects of genes.

Addition

Addition is a basic mathematical operation that represents the process of combining two or more quantities to get a total or sum.

Genome

The complete set of genes or genetic material present in a cell or organism.

Codominance

A genetic scenario where two alleles of a gene pair in a heterozygote are fully expressed, resulting in offspring with a phenotype that is neither dominant nor recessive.