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 21,2012,when the fair market value is $120 per share.She sells the 100 shares of stock 3 1/2 years later for $140.Determine the recognized gain on the sale and classify it as capital or ordinary.

• A) $2,000 LTCG.
• B) $2,000 ordinary income.
• C) $4,000 LTCG.
• D) $4,000 ordinary income.
• E) None of the above.

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Definitions:

Investigation

The systematic inquiry or study into something to establish facts and reach new conclusions.

Coastline Uplifted

The rise of landmasses relative to the sea level, often caused by tectonic activities such as earthquakes or isostatic adjustments, leading to changes in coastal landscapes.

Subsided

The process by which an area of land sinks to a lower level than the surrounding land area, often due to natural geological processes or the extraction of underground resources.

1964 Alaskan Earthquake

A powerful seismic event that struck Southcentral Alaska on March 27, 1964, also known as the Great Alaskan Earthquake, the second most powerful earthquake ever recorded.