On September 1, 2016, Beaconsfield Corporation grants Albert a nonqualified stock option to acquire 500 shares of

Question:

On September 1, 2016, Beaconsfield grants Albert a nonqualified stock option to acquire 500 shares of the company's stock for $8 per share. The fair market value of the stock on the date of grant is $14. Determine the tax consequences to both Albert and the Beaconsfield in each of the following situations:
a. The option has a readily ascertainable fair market value of $3 per share, and Albert exercises the option on February 15, 2017, when the fair market value of the stock is $16.
b. The option does not have readily ascertainable fair market value and Albert exercises the option on February 15, 2017, when the fair market value of the stock is $16.
c. The option has a readily ascertainable fair market value of $3 per share but is subject to a substantial risk of forfeiture and Albert does not make a Section 83(b) election. When the restrictions lapse on September 30, 2017, the fair market value of the stock is $20 per share.
d. The option has a readily ascertainable fair market value of $3 per share but is subject to substantial risk of forfeiture and Albert makes a Section 83(b) election.
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...