1. Jackie receives incentive stock options (ISOs) with an exercise price equal to the FMV at the date of the grant of $22. Jackie exercises these options 3 years from the date of the grant when the FMV of the stock is $30. Jackie then sells the stock 3 years after exercising for $35. Which of the following statements is (are) true? 1. At the date of grant, Jackie will have ordinary income equal to $22. 2. At the date of exercise, Jackie will have W-2 income of $8. 3. At the date of sale, Jackie will have long-term capital gain of $13. 4. Jackies employer will not have a tax deduction related to the grant, exercise or sale of this ISO by Jackie.

a)3 only. b)3 and 4. c)2, 3, and 4. d)1, 2, and 4.

2. Marguerite received nonqualified stock options (NQSOs) with an exercise price equal to the FMV at the date of the grant of $22. Marguerite exercises the options 3 years after the grant date when the FMV of the stock was $30. Marguerite then sells the stock 3 years after exercising for $35. Which of the following statements are true? 1. At the date of the grant, Marguerite will have ordinary income of $22. 2. At the date of exercise, Marguerite will have W-2 income of $8. 3. At the date of sale, Marguerite will have long term capital gain of $5. 4. Marguerites employer will have a deductible expense in relation to this option of $22.

a)3 only. b)2 and 3. c)2, 3, and 4. d)1, 2, 3, and 4.