Yvonne Exercises Incentive Stock Options (ISOs)for 100 Shares of Apple

question 68

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 holds the stock for only seven months and sells the shares for $140 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) $4,000 LTCG.
• E) None of the above.

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Definitions:

Hip-hop

A cultural movement that originated in the 1970s in the Bronx, New York, encompassing music, dance, art, and fashion.

Institutional Authority

Refers to the power and influence possessed by organizations within structured and established institutions, such as governments, religious bodies, or educational entities, that enable them to enforce norms and rules.

Deferential

Showing respectful submission or yielding to the judgment, opinion, or will of another person.

Postmodernism

A broad movement in late 20th-century thought and culture characterized by skepticism towards grand narratives and ideologies, embracing relativism, and celebrating diversity.