What Statement Is False with Respect to an Incentive Stock

question 7

Multiple Choice

What statement is false with respect to an incentive stock option (ISO) ?

• A)To qualify as an ISO, the option price must equal or exceed the fair market value of the stock at the time the option is granted.
• B)The spread is not subject to the alternative minimum tax.
• C)If the employee meets the holding period requirement, the employer does not obtain a business deduction.
• D)The spread is the excess of the FMV of the share at the date of exercise over the option price.
• E)None of the above are false.

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Definitions:

Commodities

Commodities are raw materials or agricultural products that can be bought and sold, such as gold, oil, or grains.

Nonnegotiable

Something that cannot be bargained or altered; absolute or not subject to change.

Payment Schedule

A detailed plan outlining when and how financial payments are to be made.

Security Agreement

An agreement that creates or provides for a security interest between the debtor and a secured party.