Tad Is a Vice-President of Ruby Corporation

question 119

Multiple Choice

Tad is a vice-president of Ruby Corporation.In 2011,he acquired 500 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 2011,the fair market value of the stock was $43 per share.The stock became freely transferable in 2015.Tad sold the 500 shares for $50 per share in 2013.Which of the following statements is incorrect?

• A) Acquisition of the stock in 2011 had no effect on Tad's taxable income, but increased AMTI by $5,000 in 2011.
• B) Tad's regular income tax basis for the stock is $33,000 and his AMT basis is $43,000 in 2011.
• C) Tad must report a positive AMT adjustment of $5,000 in 2015.
• D) Tad will have a negative AMT adjustment of $5,000 in 2013.
• E) All of the above are correct.

Understand the application of t-distribution in estimating population means from sample data.

Understand and apply hypothesis testing for population means.

Calculate and interpret test statistics and p-values.

Construct and interpret confidence intervals for population means.

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Definitions:

Cash Flow

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business.

Economic Life

The expected period of time during which an asset remains useful to the owner for generating income or other benefits.

Investment Dollars

The amount of money committed to investments with the expectation of generating a future return.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money.