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dOpting Inc. has a very generous stock option plan that allows all of their long term employees to participate. Sandra has worked for the Company
dOpting Inc. has a very generous stock option plan that allows all of their long term employees to
participate. Sandra has worked for the Company for over years and has participated in this plan on a
regular basis. With regards to the last options granted to her, the following information is relevant:
On January Sandra was granted options to acquire of the Company's shares at a price of
$ per share.
At a later point in time, when Sandra exercises these options, the Company's shares have a FMV of
$ per share.
On December all of the shares acquired with the options are sold.
Required: Indicate the income tax consequences to Sandra of the transactions that took place during
and under each of the following independent Cases. Your answer should include the effect on
employment income, net income and taxable income. Where relevant, identify these effects separately.
Case A Opting is a CCPC At the time the options were granted, the FMV of the Company's shares was
$ per share. The options are exercised on February When the shares are sold, the proceeds
of disposition are $ per share.
Case B Opting is a Canadian public company. At the time the options were granted, the Company's
shares were trading at $ per share. The options are exercised on February When the shares
are sold, the proceeds of disposition are $ per share.
Case C Opting is a Canadian public company. At the time the options were granted, the Company's
shares were trading at $ per share. The options are exercised on July When the shares are
sold, the proceeds of disposition are $ per share.
Case D Opting is a CCPC At the time the options were granted, the Company's shares had a FMV of
$ per share. The options are exercised on July When the shares are sold, the proceeds of
disposition are $ per shareOpting Inc. has a very generous stock option plan that allows all of their long term employees to
participate. Sandra has worked for the Company for over years and has participated in this plan on a
regular basis. With regards to the last options granted to her, the following information is relevant:
On January Sandra was granted options to acquire of the Company's shares at a price of
$ per share.
At a later point in time, when Sandra exercises these options, the Company's shares have a FMV of
$ per share.
On December all of the shares acquired with the options are sold.
Required: Indicate the income tax consequences to Sandra of the transactions that took place during
and under each of the following independent Cases. Your answer should include the effect on
employment income, net income and taxable income. Where relevant, identify these effects separately.
Case A Opting is a CCPC At the time the options were granted, the FMV of the Company's shares was
$ per share. The options are exercised on February When the shares are sold, the proceeds
of disposition are $ per share.
Case B Opting is a Canadian public company. At the time the options were granted, the Company's
shares were trading at $ per share. The options are exercised on February When the shares
are sold, the proceeds of disposition are $ per share.
Case C Opting is a Canadian public company. At the time the options were granted, the Company's
shares were trading at $ per share. The options are exercised on July When the shares are
sold, the proceeds of disposition are $ per share.
Case D Opting is a CCPC At the time the options were granted, the Company's shares had a FMV of
$ per share. The options are exercised on July When the shares are sold, the proceeds of
disposition are $ per share
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