Six years ago, Ms. PL paid $20 per share for 1,000 shares of her employer's stock. This

Question:

Six years ago, Ms. PL paid $20 per share for 1,000 shares of her employer's stock. This stock is now worth $58 per share. Ms. PL wants to exercise a stock option to buy 1,000 more shares at a strike price of $29 per share. Because she does not have $29,000 cash readily available, she has requested that the corporation allow her to exchange 500 of her original shares (valued at $29,000) for the 1,000 new shares.

Identify the tax issue or issues suggested by the above situations, and state each issue in the form of a question.

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. 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...