Answered: What is the tax impact on john's income…

Business

Accounting

What is the tax impact on john's income from the stock options in 2016?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

john receives 100 stock options in XYC Co, which is a public company. He was
granted the stock options in 2016 when the fair market value of the shares was $5
per share and the exercise price was $6 per share. He exercised his stock options in
2018 when the fair market value was $18 per share. In 2020, john plans to sell his
100 shares for $22 per share.

What is the tax impact on john's income from the stock options in 2016?

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