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 two years and sells the shares for $115 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)$1,500 LTCG.
E)None of these.

Question

Quizplus · Accepted Answer

$1,500 LTCG [100 shares × ($115 - $100)].

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