Orange Inc. issued 20,000 nonqualified stock options valued at $40,000 (in total). The options vest over two years-half in 2019 (the year of issue) and half in 2020. One thousand options are exercised in 2020 with a bargain element on each option of $6. What is the 2020 book-tax difference associated with the stock options?

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The book-tax difference is $14,000 unfavorable because the company recognizes $12,000 of compensation expense for the options exercised in 2020, but only $6,000 of taxable income.