Roxy, Inc., grants 1,000 NQSO to an employee, Carol, entitling her to purchase Roxy stock at $10 per share (the current price of the stock). Roxy simultaneously grants 1,000 ISOs to another employee, Donna, entitling her to buy 1,000 shares of Roxy at $10 per share over a two-year period. One year later, 2017, the stock has risen to $20 per share, and Carol and Donna both exercise their options in full, receiving stock not subject to an SRF.
a.What happens to Carol tax-wise in 2017?
b.What happens to Donna tax-wise in 2017?
c.What happens to Roxy, Inc., tax-wise in 2017?
d.What happens to Carol tax-wise in 2019 when she sells her stock for $37?
e.What happens to Donna tax-wise in 2019 when she sells her stock for $38?
f. What happens to Roxy, Inc., tax-wise in 2019 with respect to these transactions?

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The Answer of Roxy, Inc., grants 1,000 NQSO to an employee, Carol, entitling her to purchase Roxy stock at $10 per share (the current price of the stock). Roxy simultaneously grants 1,000 ISOs to another employee, Donna, entitling her to buy 1,000 shares of Roxy at $10 per share over a two-year period. One year later, 2017, the stock has risen to $20 per share, and Carol and Donna both exercise their options in full, receiving stock not subject to an SRF.
a.What happens to Carol tax-wise in 2017?
b.What happens to Donna tax-wise in 2017?
c.What happens to Roxy, Inc., tax-wise in 2017?
d.What happens to Carol tax-wise in 2019 when she sells her stock for $37?
e.What happens to Donna tax-wise in 2019 when she sells her stock for $38?
f. What happens to Roxy, Inc., tax-wise in 2019 with respect to these transactions?

Roxy, Inc, Grants 1,000 NQSO to an Employee, Carol, Entitling Her