Several years ago, Mr. B’s employer gave him options to purchase 1,200 shares of the employer’s stock at a price of $32 per share. At that time, the shares were trading at $30 per share. The employer is a publicly traded company. During April 2020, Mr. B exercises the options. At this time, the shares are trading at $38 per share. During July 2021, Mr. B sells the shares for $46 per share.
Several years ago, Mr. B’s employer gave him options to purchase 1,200 shares of the employer’s stock at a price of $32 per share. At that time, the shares were trading at $30 per share. The employer is a publicly traded company. During April 2020, Mr. B exercises the options. At this time, the shares are trading at $38 per share. During July 2021, Mr. B sells the shares for $46 per share.
Required: Determine the tax effect of the transactions that took place during 2020 and 2021 on Mr. B’s Net Income For Tax Purposes (NIFTP) and Taxable Income. Show full calculation in your Excel. Round your answers to the nearest dollar amount.
Indicate the following figures in your calculations:
- 2020: Effect on NIFTP & Taxable income
- 2021: Effect on NIFTP & Taxable income
- If the option price was $28, how would that have affected the tax effect (NIFTP & Taxable income) of 2020 year? (Explain the changes, no numerical analysis is necessary.)
In addition, input the
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