On January 1,2011,Gail (an executive)receives a warrant to purchase one share of stock at $70 and on the same date the fair market value of the stock is $100.The warrant has no restrictions and has a readily ascertainable fair market value on a stock exchange of $30.She exercises the warrant on May 15,2011,and sells the stock for $200 on December 20,2014.
a.Calculate the amount Gail would recognize in 2011,if any.
b.Calculate the amount Gail would recognize in 2014,if any.
c.Suppose she sells the warrant in 2015 for $39.What amount would Gail recognize?

Question

Quizplus · Accepted Answer

The Answer of On January 1,2011,Gail (an executive)receives a warrant to purchase one share of stock at $70 and on the same date the fair market value of the stock is $100.The warrant has no restrictions and has a readily ascertainable fair market value on a stock exchange of $30.She exercises the warrant on May 15,2011,and sells the stock for $200 on December 20,2014.
a.Calculate the amount Gail would recognize in 2011,if any.
b.Calculate the amount Gail would recognize in 2014,if any.
c.Suppose she sells the warrant in 2015 for $39.What amount would Gail recognize?

On January 1,2011,Gail (An Executive)receives a Warrant to Purchase One