Maren received 11 NQOs (each option gives her the right to purchase shares of stock for $9 per share) at the time she started working when the stock price was $7 per share. When the share price was $19 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?
Maren received 11 NQOs (each option gives her the right to purchase shares of stock for $9 per share) at the time she started working when the stock price was $7 per share. When the share price was $19 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?
Tax:
Tax is a financial charge imposed by the county's government on the income of the person, and the company is called a tax.
Taxable income is an income left after subtracting expenses and deductions. It is a base on which income tax is calculated or income tax system imposes the tax. These taxes are directly or indirectly paid by the taxpayer to the government.
Tax liability is an amount that directly or indirectly pays to the government. By deducting certain deductions a tax liability can be reduced.
Capital gain:
Capital gain is realized from a sale of investments like bonds, shares, debentures, and PPE. If loss bear on the sale of investment and PPE is called a capital loss.
Capital gain is classified into:
- Long term capital gain
- Short term capital gain
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