Tad Is a Vice-President of Ruby Corporation

question 4

Multiple Choice

Tad is a vice-president of Ruby Corporation. In 2012, he acquired 800 shares of Ruby Corporation stock under the corporation's incentive stock option (ISO) plan for an option price of $33 per share. At the date of exercise in 2012, the fair market value of the stock was $43 per share. The stock became freely transferable in 2013. Tad sold the 800 shares for $50 per share in 2014. Which of the following statements is incorrect?

• A)Acquisition of the stock in 2012 had no effect on Tad's taxable income, but increased AMTI by $8,000 in 2012.
• B)Tad's regular income tax basis for the stock is $26,400 and his AMT basis is $34,400 in 2012.
• C)Tad must report a negative AMT adjustment of $5,000 in 2013.
• D)Tad will have a positive AMT adjustment of $5,000 in 2014.
• E)All of the above are correct.

---

Definitions:

Density-Independent

Referring to factors that affect the growth rates of populations regardless of the population density, such as weather or natural disasters.

Temperature

Measure of molecular motion.

Population Density

Number of individuals per unit area.

Density Independent

Referring to factors affecting the growth, size, or mortality of a population that do not depend on the density of the population.