Beverly works for a large publicly traded company and regularly receives incentive stock options as bonuses.In the current year,Beverly exercises options to purchase 1,000 shares at $48 per share when the market value is $72 per share.What is Beverly's AMT adjustment from the exercise of the options?
A)$48,000.
B)$24,000.
C)$72,000.
D)None of these.

Question

Quizplus · Accepted Answer

When Beverly exercises her incentive stock options, she will have a taxable AMT adjustment equal to the difference between the fair market value of the stock on the exercise date ($72) and the option exercise price ($48) multiplied by the number of shares exercised (1,000). 
AMT adjustment = ($72 - $48) × 1,000 = $24,000. Therefore, option B is the correct answer.

Beverly Works for a Large Publicly Traded Company and Regularly