Maren received 11 NQOs (each option gives her the right to purchase 11 shares of stock for $9 per share) at the time she started working when the stock price was $7 share. When the share price was $16 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $21 per share. What is the amount of Maren’s bargain element?   Multiple Choice   ____   $0. ____   $847 ____   $1,089. ____   $1,936. ____  None of the choices are correct

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.