Yvonne exercises incentive stock options (ISOs)for 100 shares of Apple Corporation stock at the option price of $100 per share on May 21,2014,when the fair market value is $120 per share.She sells the 100 shares of stock 3 1/2 years later for $140.Determine the recognized gain on the sale and classify it as capital or ordinary.
A)$2,000 LTCG.
B)$2,000 ordinary income.
C)$4,000 LTCG.
D)$4,000 ordinary income.
E)None of these.

Question

Quizplus · Accepted Answer

Yvonne has a $4,000 LTCG when she sells the stock [($140 - $100)× 100 shares].

Yvonne Exercises Incentive Stock Options (ISOs)for 100 Shares of Apple