Antonio received 40 ISOs (ea
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Required information
Problem 12-31 (LO 12-2) (Static)
[The following information applies to the questions displayed below.]
Antonio received 40 ISOs (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share) at the
time he started working for Zorro Corporation six years ago. Zorro's stock price was $3 per share at the time. Now that
Zorro's stock price is $50 per share, Antonio intends to exercise all of his options and immediately sell all the shares he
receives from the options exercise.
Note: Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.
Problem 12-31 Part b (Static)
b. What are Zorro's tax consequences on the grant date, the exercise date, and the date Antonio sells the shares?
X Answer is complete but not entirely correct.
Grant date
Exercise date and sale date
Tax Benefit
$
$
0
0X
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- Wilbourne Corporation issues $250,000 of 10% preferred stock to investors who pay cash for the shares. Suppose the preferred shares are issued with a mandatory redemption feature that requires Wilbourne to buy back the stock in five years for $250,000. Should the instrument be classified as preferred stock? Justify your answerLandis is an employee of a startup venture and he is entitled to 2000 phantom stocks provided by the company. The vesting period is four years and the phantom stocks are vested in equal chunks over four years (48 months). The cliff period is two years. If Landis works in the company for four years and then leaves the company. How many actual shares he can walk away with? Group of answer choices: 2000 1500 1000 500 0Haven received 200 NQOs (each option gives him the right to purchase 20 shares of Barlow Corporation stock for $7 per share) at the time he started working for Barlow Corporation three years ago when its stock price was $7 per share. Now that Barlow's share price is $50 per share, he intends to exercise all of his options. After acquiring the 4,000 Barlow shares with his stock options, he intends to hold the shares for more than one year and then sell the shares when the price reaches $75 per share. What are the cash flow effects for Barlow Corporation resulting from Haven's option exercise? How would it change if Barlow's marginal rate were 0 percent?
- Antonio received 40 ISOs (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share) at the time he started working for Zorro Corporation six years ago. Zorro’s stock price was $3 per share at the time. Now that Zorro’s stock price is $50 per share, Antonio intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. (Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.) What are Zorro’s tax consequences on the grant date, the exercise date, and the date Antonio sells the shares?Antonio received 40 ISOs (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share) at the time he started working for Zorro Corporation six years ago. Zorro’s stock price was $3 per share at the time. Now that Zorro’s stock price is $50 per share, Antonio intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. (Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.) d. What are the cash flow effects to Zorro resulting from Antonio’s option exercise?Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now (8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share.What are MNL Corporation’s tax savings on the grant date exercise date (8/15/Y5)?
- Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now (8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share. (Leave no answer blank. Enter zero if applicable. Input all amounts as positive values.) b. What are MNL Corporation’s tax savings on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6)?Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share). She started working for MNL Corporation four years ago (5/1/Y1) when MNL’s stock price was $8 per share. Now (8/15/Y5) that MNL’s stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her stock options, she held the shares for over one year and sold (on 10/1/Y6) them at $60 per share. What are Cammie’s taxes due on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6), assuming her ordinary marginal rate is 32 percent and her long-term capital gains rate is 15 percent?Maren received 10 NQOs (each option gives her the right to purchase 15 shares of stock for $7 per share) at the time she startes working when the stock price was $6 per share. When the shareprice was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. What is the amount of Maren's bargain element?
- The company's stock was trading at $15 per share when Michelle recived a stock option grant of 3,000 shares. Assume all the shares vested at once when the stock price was $27 per share. On the day the shares vested, Michelle exercised her options and sold all the shares. How much did Michelle earn as a result?Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values. He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ . He buys the stock and then sells it some time later at $85.Total of $ . He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .jThe treasurer of Miller Co. has readnon the Internet that the stock price ofWade Inc. is about to take off . In order to profit from this potentialdevelopment, Miller Co. purchased a call option on Wade common shareson July 7, 2020, for $400. The call option is for 250shares (notional value),and the strike price is $50. (The market price of a share of Wade stock onthat date is $50.) The option expires on January 31, 2021. The followingdata are available with respect to the call option.Date Market Price of Wade Shares Time Value ofCallSeptember 30, 2020 $55 per share$100December 31, 2020 45 per share40January 4, 2021 47 per share33InstructionsPrepare the journal entries for Miller Co. for the following dates.a. July 7, 2020—Investment in call option on Wade shares.b. September 30, 2020—Miller prepares financial statements.c. December 31, 2020—Miller prepares financial statements.d. January 4, 2021—Miller settles the call option on the Wade shares.
