An employee was granted 100 Incentive Stock Options with an exercise price of $15/share. The employee exercised all of the options when the FMV was $25/share. The employee subsequently sold the stock several years after exercising the option for a price of $35/share. Using the above information, answer the following questions:

1. What amount of taxable income does the employee recognize at the exercise date?

2. What amount of taxable income does the employee recognize at the sale date?

3.Assume the same facts as above (100 options with exercise price of $15, $25 FMV at exercise date, and $35 sales price several years later), except that the options were Nonqualifying Stock Options instead of ISOs:

What amount of taxable income does the employee recognize at the exercise date?