Which of the following statements regarding nonqualified stock options (NQOs)is false?
A)Book-tax differences associated with NQOs may be either permanent or temporary.
B)If the initial estimated value of the options that are exercised during the year is greater than the bargain element of those options, the book-tax difference for that year is unfavorable.
C)If the initial estimated value of the options that are exercised during the year is greater than the bargain element of those options, the book-tax difference for that year is entirely temporary.
D)None of these choices are false (all of these choices are true).

Question

Quizplus · Accepted Answer

This statement is false because book-tax differences associated with NQOs may be permanent, temporary or a combination of both, depending on various factors such as the tax jurisdiction and the timing of the option exercises. Therefore, option C is incorrect because it states that the book-tax difference for that year is entirely temporary.

Which of the Following Statements Regarding Nonqualified Stock Options (NQOs)is