Faraway Travel, Inc. granted its vice-president, Christ Best, an incentive stock option on 1,000 shares of Faraway stock at $25 a share, its fair market value, on July 22, Year 1. Christ exercised the option on October 31, Year 2, at $42 a share and sold the stock for $47 a share on December 15, Year 3.

A. Whatwere the tax consequences to Chris?

B. To Faraway?

C. What difference, if any, does it make if Chris sold the stock on October 31, Year 3?