On January 3, 2014, Great Spirit Inc., grants Jordan a nonqualified stock option to acquire 1,000 shares of the company's stock for $12 per share. The fair market price of the stock on the date of grant is $15. The option does not have a readily ascertainable fair market value. On October 1, 2014, when the fair market value of the stock is $18, Jordan exercises the stock option. Determine the tax consequences for Jordan and Great Spirit Inc., on the grant date of the option and the exercise date.

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The Answer of On January 3, 2014, Great Spirit Inc., grants Jordan a nonqualified stock option to acquire 1,000 shares of the company's stock for $12 per share. The fair market price of the stock on the date of grant is $15. The option does not have a readily ascertainable fair market value. On October 1, 2014, when the fair market value of the stock is $18, Jordan exercises the stock option. Determine the tax consequences for Jordan and Great Spirit Inc., on the grant date of the option and the exercise date.