Bell Corporation grants an incentive stock option to Peggy, an employee, on January 1, 2015, when the

Question:

Bell grants an incentive stock option to Peggy, an employee, on January 1, 2015, when the option price and FMV of the Bell stock is $80. The option entitles Peggy to buy 10 shares of Bell stock. Peggy exercises the option and acquires the stock on April 1, 2017, when the stock’s FMV is $100. Peggy, while still employed by the Bell sells the stock on May 1, 2019, for $120 per share.
a. What are the tax consequences to Peggy and Bell on the following dates: January 1, 2015; April 1, 2017; and May 1, 2019? (Assume all incentive stock option qualification requirements are met.)
b. How would your answer to Part a change if Peggy instead sold the Bell stock for $130 per share on May 1, 2017?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...