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:

Statute of Frauds

A legal principle requiring certain types of contracts to be written and signed to be enforceable.

Assignments

The act of transferring rights, property, or responsibilities from one party to another.

Delegations

The act of authorizing another person or entity to act on one's behalf in certain matters or decision-making processes.

English Parliament

The supreme legislative body in the United Kingdom, made up of the House of Commons, the House of Lords, and the Sovereign.