Orange Inc.issued 20,000 nonqualified stock options valued at $40,000 (in total).The options vest over two years-half in 2017 (the year of issue)and half in 2018.One thousand options are exercised in 2018 with a bargain element on each option of $6.What is the 2018 book-tax difference associated with the stock options?

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The book expense for 2018 is $12,000 (10,000 options x $6 bargain element x 50% vesting in 2018). The tax deduction for 2018 is $6,000 (1,000 options exercised x $6 bargain element). The book-tax difference is $12,000 - $6,000 = $6,000 favorable.