On May 5,2011,Elton Corporation granted Germaine an option to acquire 100 shares of the company's stock for $ 8 per share.The fair market price of the stock on the date of grant was $14.The stock requires that Germaine remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Germaine exercises the option on June 12,2012,when the fair market value of the stock is $18.On June 12,2013,the fair market value of the stock is $21 per share.How much must he report as income in 2012 and 2013?
$\begin{array} { l }
&2012&2013\
a.&\$1,000&\$300\
b.&\$1,000&\$-0-\
c.&\$400&\$-0-\
d.&\$-0-&\$1,300
\end{array}$

Question

On May 5,2011,Elton Corporation granted Germaine an option to acquire 100 shares of the company's stock for $ 8 per share.The fair market price of the stock on the date of grant was $14.The stock requires that Germaine remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Germaine exercises the option on June 12,2012,when the fair market value of the stock is $18.On June 12,2013,the fair market value of the stock is $21 per share.How much must he report as income in 2012 and 2013?
$\begin{array} { l  }
&2012&2013\
a.&\$1,000&\$300\
b.&\$1,000&\$-0-\
c.&\$400&\$-0-\
d.&\$-0-&\$1,300
\end{array}$

Quizplus · Accepted Answer

The Answer of On May 5,2011,Elton Corporation granted Germaine an option to acquire 100 shares of the company's stock for $ 8 per share.The fair market price of the stock on the date of grant was $14.The stock requires that Germaine remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Germaine exercises the option on June 12,2012,when the fair market value of the stock is $18.On June 12,2013,the fair market value of the stock is $21 per share.How much must he report as income in 2012 and 2013?
$\begin{array} { l  }
&2012&2013\
a.&\$1,000&\$300\
b.&\$1,000&\$-0-\
c.&\$400&\$-0-\
d.&\$-0-&\$1,300
\end{array}$