Beverly works for a large publicly traded company and regularly receives incentive stock options as bonuses.In 2014,Beverly exercises options to purchase 1,000 shares at $48 per share when the market value is $72 per share.What is Beverly's AMT adjustment from the exercise of the options?

Question

Quizplus · Accepted Answer

The AMT adjustment for incentive stock options is the difference between the fair market value on the exercise date and the exercise price. In this case, the fair market value is $72 per share and the exercise price is $48 per share, so the AMT adjustment would be $24 per share. Multiplying this by the 1,000 shares exercised gives a total AMT adjustment of $24,000.

Beverly Works for a Large Publicly Traded Company and Regularly