Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share) at the time she started working for MNL Corporation four years ago when MNL's stock price was $8 per share. Now that MNL's stock price is $40 per share, she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her options, she held the shares for over one year and sold them at $60 per share.
a. What are Cammie's tax consequences on the grant date, the exercise date, and the date she sold the shares assuming her ordinary marginal rate is 30 percent and her capital gains rate is 15 percent?
b. What are MNL Corporation's tax consequences on grant date, exercise date, and date of sale assuming its marginal tax rate is 35 percent?
c. Complete Cammie's Schedule D for the year of sale.