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.

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Definitions:

Aging

The process of becoming older, a series of biological changes that occur in living organisms over time.

Spindle Equator

The imaginary plane located at the midpoint between the poles of a cell during mitosis or meiosis where chromosomes line up during metaphase.

Metaphase

A phase of cell division where chromosomes align in the middle of the cell before being separated into each of the two daughter cells.