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

question 33

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 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 these.

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Definitions:

Analog Input Module

An input circuit that employs an analog-to-digital converter to convert an analog value, measured by an analog measuring device, to a digital value that can be used by the processor.

Digital-To-Analog Converter

A device that converts digital signals (representing numerical values) into analog signals (representing physical quantities).

Binary Bits

The smallest unit of data in computer processing, representing a 0 or 1 in the binary numeral system, used for representing all types of data.

Words

In computing, words refer to the standard data size that a processor is designed to handle effectively, typically representing a specific number of bits, such as 16, 32, or 64.