Imperial Construction Inc. (IC) issued 100,000 incentive stock options (ISOs) to its employees on January 1, 2018, with an estimated value of $5.50 per option. The options vest (accrue) at 25 percent per year for four years (beginning in 2019). Each option allows the holder to purchase one share of stock at $8. On January 1, 2020, employees exercised 12,500 options as IC's stock price reached $14.72. What is the amount of the book-tax difference in 2020 associated with the incentive stock options? Is it favorable or unfavorable? Is it temporary or permanent?

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The Answer of Imperial Construction Inc. (IC) issued 100,000 incentive stock options (ISOs) to its employees on January 1, 2018, with an estimated value of $5.50 per option. The options vest (accrue) at 25 percent per year for four years (beginning in 2019). Each option allows the holder to purchase one share of stock at $8. On January 1, 2020, employees exercised 12,500 options as IC's stock price reached $14.72. What is the amount of the book-tax difference in 2020 associated with the incentive stock options? Is it favorable or unfavorable? Is it temporary or permanent?