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

question 39

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 21,2014,when the fair market value is $120 per share.She holds the stock for only seven months and sells the shares for $140 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)$4,000 LTCG.
• E)None of these.

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Definitions:

Luxury Yachts

Luxury yachts are high-end, luxurious boats that are often equipped with sophisticated amenities and are used for personal or commercial pleasure.

Cartel Members

Firms or countries that collaborate to control prices and production in an industry, acting together rather than competing, often to maximize collective profits.

Cartel Members

Individuals or entities that form an agreement to control prices and limit competition within a market.

Collusive Agreement

A secret or illegal cooperation or conspiracy, especially between businesses, to cheat or deceive others, typically by fixing prices or rigging markets.