Hanifah is the operating manager for Flowers Now, Inc. (FNI). FNI grants 1,000 incentive stock options to Hanifah on February 1, Year 8, when the stock has a fair market value of $135 per share. The terms are as follows:

• Exercise price is $150 per share.

• Hanifah must wait at least six months to exercise the options and she must exercise them by February 1, Year 15.

• Hanifah exercises the options on June 5, Year 9 when the stock is selling for $170 per share.

• Hanifah sells the 1000 shares of stock for $185 per share on August 6, Year 11.

a. Identify the key dates for these transactions.

b. What are the tax consequences to Hanifah including the character of the gain?

c. If Hanifah had sold her shares on June 1, Year 10, what are the tax consequences including the character of the gain?