On January 31 of this year, Jennifer pays $700 for an option to acquire 100 shares of Lifetime Corporation common stock for $70 per share. Jennifer exercises the option on June 2. Jennifer sells the stock on April 30 of next year for $10,000. Jennifer's basis for the stock immediately before the sale is

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Jennifer's basis for the stock is the exercise price of the option plus the cost of the option itself. She paid $70 per share for 100 shares, totaling $7,000, plus the $700 option cost, making her total basis $7,700.

On January 31 of This Year, Jennifer Pays $700 for an Option