On February 1 of Year 0, John received a nonqualified stock option to purchase 100 shares of his employer’s stock for $10 per share. At the time John received the option, it was selling for $5 per share on an established exchange. On September 1 of Year 1, John exercised the options when the stock was selling for $19 per share. On December 1 of Year 2, John sold all of the shares for $30 per share. What amount and character of income does John recognize in Year 2? $2,000 ordinary income $2,000 long-term capital gain $1,500 ordinary income $1,500 long-term capital gain
On February 1 of Year 0, John received a nonqualified stock option to purchase 100 shares of his employer’s stock for $10 per share. At the time John received the option, it was selling for $5 per share on an established exchange. On September 1 of Year 1, John exercised the options when the stock was selling for $19 per share. On December 1 of Year 2, John sold all of the shares for $30 per share. What amount and character of income does John recognize in Year 2? $2,000 ordinary income $2,000 long-term capital gain $1,500 ordinary income $1,500 long-term capital gain
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 26CE: On April 5, 2017, Gustavo was granted an NQSO for 200 shares of common stock at 50 per share. On the...
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- On February 1 of Year 0, John received a nonqualified stock option to purchase 100 shares of his employer’s stock for $10 per share. At the time John received the option, it was selling for $5 per share on an established exchange. On September 1 of Year 1, John exercised the options when the stock was selling for $19 per share. On December 1 of Year 2, John sold all of the shares for $30 per share. What amount and character of income does John recognize in Year 2?
- $2,000 ordinary income
- $2,000 long-term
capital gain - $1,500 ordinary income
- $1,500 long-term capital gain
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