Orange Inc. issued 20,000 nonqualified stock options valued at $40,000 (in total). The options vest over two years-half in 2018 (the year of issue) and half in 2019. One thousand options are exercised in 2019 with a bargain element on each option of $6. What is the 2019 book-tax difference associated with the stock options?

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The book-tax difference in 2019 is the difference between $20,000 expensed for book purposes (50% × $40,000) and $6,000 (1,000 options exercised × $6 bargain element). It is unfavorable because book expenses exceed tax deductions.