Faraway Travel, Inc. granted its vice-president, Chris Best, an incentive stock option on 1,000 shares of Faraway stock at $25 a share, its fair market value, on July 22, Year 1. Chris exercised the option on October 31, Year 2, at $42 a share and sold the stock for $47 a share on December 15, Year 3. 2 15

a. What were the tax consequences to Chris?

b. To Faraway?

c. What difference, if any, does it make if Chris sold the stock on October 31, Year 3?