Marvin,the vice president of Lavender,Inc. ,exercises stock options for 100 shares of stock in March 2015.The stock options are incentive stock options (ISOs) .Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2011 and all restrictions on the free transferability had lapsed by the exercise date.
A) If Marvin sells the stock in December 2016 for $3,000,his AMT adjustment in 2016 is a positive adjustment of $800.
B) If Marvin sells the stock in December 2017 for $3,000,his AMT adjustment in 2017 is $0.
C) If Marvin sells the stock in December 2016 for $3,000,his AMT adjustment in 2016 is a negative adjustment of $800.
D) If Marvin sells the stock in December 2017 for $3,000,his AMT adjustment in 2017 is a negative adjustment of $1,000.
E) None of the above.
Correct Answer:
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