Kaijsa Received 20 NQOs (Each Option Gives Her the Right

question 52

Essay

Kaijsa received 20 NQOs (each option gives her the right to purchase 30 shares of stock for $8 per share)from her employer at the time she started working, when the stock price was $9 per share. Now that the share price is $18 per share, she intends to exercise all of her options. If Kaijsa holds the shares for two years and sells them when the market price is $25, what is the amount of the deduction and tax savings her employer will receive (assume the employer's marginal tax rate is 21 percent)?

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Definitions:

Warning Labels

Labels or notices attached to products or contained in product documentation, informing consumers of potential risks and hazards associated with the product's use.

Instruction Book

A manual or booklet providing detailed guidelines, steps, or instructions on how to operate, assemble, or use an item or software.

Manufacturing Defects

Flaws or errors in a product that occur during its production, often leading to the product failing to meet safety or quality standards.

Design Defects

Flaws in the planning or design of a product that result in it being unsafe or failing to perform as intended.