Marvin,the Vice President of Lavender,Inc

question 109

Multiple Choice

Marvin,the vice president of Lavender,Inc. ,exercises stock options for 100 shares of stock in March 2010.The stock options are incentive stock options (ISOs) .Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2007 and all restrictions on the free transferability had lapsed by the exercise date.

• A)If Marvin sells the stock in December 2010 for $3,000,his AMT adjustment in 2010 is a positive adjustment of $800.
• B)If Marvin sells the stock in December 2011 for $3,000,his AMT adjustment in 2011 is $0.
• C)If Marvin sells the stock in December 2010 for $3,000,his AMT adjustment in 2010 is a negative adjustment of $800.
• D)If Marvin sells the stock in December 2011 for $3,000,his AMT adjustment in 2011 is a negative adjustment of $1,000.
• E)None of the above.

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