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:

Generalized Other

A concept in sociology referring to the general notion that a person has of the common expectations that others have about actions and thoughts within a particular society.

Agent of Socialization

Individuals, groups, or institutions that play significant roles in integrating individuals into larger society by teaching social norms, values, and practices.

Looking-glass Self

A concept in sociology that suggests a person's self-understanding is constructed, in part, by how they believe others perceive them.

Stable Personality

A personality trait indicating that an individual's behavior and emotional reactions are consistent over time.