Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 24

Arnold exercised an incentive stock option in 2006, acquiring 1,500 shares of stock at an option price of $80 per share. The FMV of the stock at the date of exercise was $110 per share. In 2008, the rights become freely transferable and are not subject to a substantial risk of forfeiture. Arnold sells the shares in 2009 for $165 per share. How do these transactions affect AMTI in 2006, 2008, and 2009?