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:

Perceptual Development

The gradual development of the ability to interpret and understand sensory information.

Nearsighted

A vision condition in which close objects are seen clearly, but objects farther away appear blurred.

Discriminate Colors

Discriminate colors refers to the ability to perceive and differentiate various colors and shades.

Rooting

An instinctual reflex in newborns, where touching the cheek leads to the baby turning their head and opening the mouth to facilitate breastfeeding.