Maren received 10 nqos (each option gives her the right to purchase 7 shares of stock for $8 per share) at the time she started working

Question

Maren received 10 nqos (each option gives her the right to purchase 7 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. when the share price was $18 per share, she exercised all of her options. eighteen months later she sold all of the shares for $23 per share. how much gain will maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

Saul Waters · Accepted Answer

Answer and Explanation:The computation of the gain recognized and the tax that should be paid is shown belowSale of share(10 × 8 × $22) $1,760Less: basis (10 × 8 ×$15) $1,200 The gain realized $560Now the tax would be = $560 × 15% preferential rate = $84

Saul Waters · Answer

E⁣⁣⁣xplanation i⁣⁣⁣s i⁣⁣⁣n a f⁣⁣⁣ile bit.ly/3a8Nt8n

Saul Waters · Answer

Option (b) is correct.Explanation:Sale of share = NQOs received × No. of shares × Selling price per share                       = 10 × 8 × $22                       = $1,760Gain realised: = Sale of share - Basis= $1,760 - [NQOs received × No. of shares × Selling price per share at $15]= $1,760 - [10 × 8 × $15]= $1,760 - $1,200= $560Tax paid = Gain realised × preferential rate                = $560 × 15%                = $84

Ms. Mara Collier

Maren received 10 nqos (each option gives her the right to purchase 7 shares of stock for $8 per share) at the time she started working

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