On October 2, 2014, Miriam sells 1,000 shares of stock at $20 per share. Miriam acquired the stock on November 12, 2013, when she exercised her option to purchase the shares through her company's incentive stock option plan. The exercise price was $11 per share and the fair market value of the stock at the date of exercise was $14 per share. For 2014, Miriam must report Ordinary Capital Income Gain
A) $3,000 $6,000
B) $6,000 $3,000
C) $9,000 $-0-
D) $-0- $9,000

Question

Quizplus · Accepted Answer

The correct answer is A because the ordinary capital income gain is the difference between the sale price and the exercise price, which is $20 - $11 = $9 per share. Since Miriam sold 1,000 shares, the total ordinary capital income gain is $9 x 1,000 = $9,000.

On October 2, 2014, Miriam Sells 1,000 Shares of Stock