Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share)at the time she started working when the stock price was $6 per share.When the share price was $15 per share,she exercised all of her options.Eighteen months later she sold all of the shares for $20 per share.How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 39.6 percent?
A) $0 gain and $0 tax.
B) $500 gain and $100 tax.
C) $500 gain and $175 tax.
D) $1,200 gain and $180 tax.

Question

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The Answer of Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share)at the time she started working when the stock price was $6 per share.When the share price was $15 per share,she exercised all of her options.Eighteen months later she sold all of the shares for $20 per share.How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 39.6 percent?
A) $0 gain and $0 tax.
B) $500 gain and $100 tax.
C) $500 gain and $175 tax.
D) $1,200 gain and $180 tax.

Maren Received 10 NQOs (Each Option Gives Her the Right