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:

Compensation System

Compensation System is the structure and methodology an organization uses to pay its employees, including wages, salaries, bonuses, and benefits.

Seasonal Fluctuations

Variations in economic or business activity that occur as a result of seasonal changes, affecting industries such as tourism, agriculture, and retail.

Sales Competition

A contest among sales personnel or teams to motivate them to increase sales performance and achieve specific targets.

Sales Territory

A designated geographical area assigned to a salesperson or team where they are responsible for conducting business activities.