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 holds the stock for only seven months and sells the shares for $140 per share.Determine the recognized gain on the sale and classify it as capital or ordinary.
A)$2,000 ordinary income and $2,000 STCG.
B)$2,000 ordinary income and $2,000 LTCG.
C)$4,000 ordinary income.
D)$4,000 LTCG.
E)None of these.

Question

Quizplus · Accepted Answer

Yvonne has $2,000 [($120 - $100)× 100 shares] of ordinary income and $2,000 [($140 - $120)× 100 shares] of STCG.

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