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
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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
Transcribed Image Text: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
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