On May 5, 2012, 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, 2013, when the fair market value of the stock is $18. On June 12, 2014, the fair market value of the stock is $21 per share. How much must he report as income in 2013 and 2014?

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The Answer of On May 5, 2012, 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, 2013, when the fair market value of the stock is $18. On June 12, 2014, the fair market value of the stock is $21 per share. How much must he report as income in 2013 and 2014?

On May 5, 2012, Elton Corporation Granted Germaine an Option