Xavier exercised a nonstatutory stock option on April 29, 2022. He purchased 1,000 shares of his company's stock for $10,000. The fair market value of the stock at the time of purchase was $15,500. He included the $5,500 difference between the fair market value and the purchase price as compensation income when he filed his 2022 return. What is Xavier's basis in the underlying stock? $0 $5,500 $10,000 $15,500

Xavier exercised a nonstatutory stock option on April 29, 2022. He purchased 1,000 shares of his company's stock for $10,000. The fair market value of the stock at the time of purchase was $15,500. He included the $5,500 difference between the fair market value and the purchase price as compensation income when he filed his 2022 return. What is Xavier's basis in the underlying stock? $0 $5,500 $10,000 $15,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject : Accounting Larry started working for Burgers, Inc. on June 1, 2020. At the end of 2020, Larry received 100 Burgers, Inc. stock options as part of his compensation. Each option allowed him to purchase one share of Burgers, Inc. for $20.00. Shares of Burgers, Inc. traded at $25.00 per share on December 31, 2020. An independent valuation firm valued each option at $5.00 as of that date. Larry did not make a § 83(b) election. Larry exercised all his options on September 15, 2022. On that date, stock of Burgers, Inc. traded for 37.00 per share on the open market. Determine: The amount of income Larry must recognize in 2020, upon receiving the options. The amount of income Larry must recognize in 2022, upon exercising the options. Larry’s basis in the Bergers, Inc. stock he purchased through exercising the options.
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A Owns 500 ordinary shares of B Company which has several hundred thousand shares publicly traded. These 500 shares were purchased by A in the early part of 2019 for 200 per share. On August 20, 2019, B distributed 500 rights to A. A was entitled to buy one new share of B ordinary shares at P 180 and two share rights. On September 1, 2019, when the market value of the share was P203, A exercise Dall the rights and received 250 ordinary shares. How much is the investment income recognized by A upon exercise of the rights? please show solution. thank you