Orange Inc. issued 20,000 nonqualified stock options valued at $40,000 (in total). The options vest over two years - half in 2014 (the year of issue) and half in 2015. One thousand options are exercised in 2015 with a bargain element on each option of $6. What is the 2015 book-tax difference associated with the stock options?

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The book expense for 2015 is $20,000 (half of $40,000), while the tax deduction is $6,000 (1,000 options x $6 bargain element). The book-tax difference is $14,000 unfavorable ($20,000 book expense - $6,000 tax deduction).