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

Question

Business

Nehemiah Hobbs

10 October, 04:51

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

+4

Answers (1)

Know the Answer?

Ainsley Haley · Answer 1

a) $20,000

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.