Etta Received Nontaxable Stock Rights on October 3, 2012

question 182

Multiple Choice

Etta received nontaxable stock rights on October 3, 2012.She allocated $12,000 of the $30,000 basis for the associated stock to the stock rights.The stock rights are exercised on November 8, 2012.The exercise price for the stock is $42,000.What is Etta's basis for the acquired stock?

• A)$12,000.
• B)$42,000.
• C)$54,000.
• D)$72,000.
• E)None of the above.

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Definitions:

Unilateral Changes

Changes imposed by one party onto another without mutual agreement or negotiation.

Bargained

Negotiated terms and conditions that have been agreed upon by two or more parties, especially relating to employment contracts and labor relations.

Impasse

A deadlock or stalemate reached during negotiations where both sides are unable to resolve differences and move forward, often leading to a halt in discussions until conditions change.

Mainstream Industrial Relations

Pertains to the conventional study and practice of the relationship between employers, workers, and the government including trade unions and collective bargaining.