Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $25 pershare). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $25 per share. Yostexercised all of his options when the share price was $50 per share. Two years after acquiring the shares, he sold them at$77 per share.Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.Problem 12-28 Part d (Algo)d. Assume that Yost's options were exercisable at $30 and expired after five years. If the stock only reached $28 during its high pointduring the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold,assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent?Answer is complete but not entirely correct.TaxesDus$ 26,250Grant dateExercise dateSale date0012,150

There are tax consequences only when there is a profit earned on the options trading. The tax is…

d. Assume that Yost's options were exercisable at $30 and expired after five years. If the stock only reached $28 during its high point during the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent?

d. Assume that Yost's options were exercisable at $30 and expired after five years. If the stock only reached $28 during its high point during the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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