Yost received 300 NQOS (each option give
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Problem 12-28 (LO 12-2) (Algo)
[The following information applies to the questions displayed below.]
Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $23 per
share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $23 per share. Yost
exercised all of his options when the share price was $46 per share. Two years after acquiring the shares, he sold them at
$71 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 $28 and expired after five years. If the stock only reached $26 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?
Grant date
Exercise date
Sale date
Taxes Due](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5fbbe0ae-bbab-4609-8ac5-87fc6017322b%2Ffd120f26-f63b-457b-8c8e-6aa3e00d5990%2Fj1fmxds_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
Problem 12-28 (LO 12-2) (Algo)
[The following information applies to the questions displayed below.]
Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $23 per
share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $23 per share. Yost
exercised all of his options when the share price was $46 per share. Two years after acquiring the shares, he sold them at
$71 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 $28 and expired after five years. If the stock only reached $26 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?
Grant date
Exercise date
Sale date
Taxes Due
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