1. Caroline Company issued stock options to key executives. The exercise price is $36. In Year 5, an executive exercises the option when the market price is $47. Six months later, the executive sells the stock for $52. Which of the following is true? a. The gain of $16 is nontaxable at the exercise date if this is an incentive stock option plan. b. The gain of $11 is nontaxable at the exercise date, but the gain of $5 is taxable when the stock is sold if this is an incentive stock option plan. c. The gain of $11 is taxable at the exercise date and the gain of $5 is taxable when the stock is sold if this is a nonqualified stock option plan. d. Neither the gain of $11 nor the gain of $5 is taxable if this is an incentive stock option plan