Emma received 100 NQOs (each option provides a right to purchase 25 shares of ERP stock for $8 per share) at the time she started working for ERP Corporation (5/1/Y1) four years ago when ERPs stock price was $5 per share. Now (8/15/Y5) that ERPs stock price is $32 per share, she intends to exercise all of her options. After acquiring the 2,500 ERP shares with her options, she held the shares for over one year (10/1/Y6) and sold them at $56 per share.

A. What are Emmas tax consequences on the grant date (5/1/Y1), the exercise date (8/15/Y5), and the sale date (10/1/Y6) assuming her ordinary marginal rate is 32 percent and her capital gains rate is 15 percent? (Include your calculations within your submission).

B. What are ERP Corporations tax consequences on grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6) assuming its marginal tax rate is 21 percent? (Include your calculations within your submission).