Question

Robert Corp. granted an incentive stock option for 200 shares to Beverly, an employee, on March 14, Year 12. The option price and FMV on the date of grant was $150. Beverly exercised the option on August 2, Year 14, when the FMV was $180 per share. She sold the stock on September 20, Year 15, for $250 per share. How much gross income did Beverly recognize in Year 15?

a. $20,000
b. $150
c. $30,000
d. $0

Answer 1

a) $20,000

Step-by-step explanation:

Hi, if Beverly exercises the option, that means that she bought the shares for $150 each, that is 200 shares * $150/share = $30,000. After that, in September 20,xx15, she sells the stocks for $250/share, which is 200 shares*$250 =$50,000.

So the gross income that Beverly recognizes in year xx15 is $50,000-$30,000 = $20,000 which is a)

Best of luck.