Imelda has accepted a job as a key executive. In her multi$-$million$-$dollar compensation negotiations, she elects to receive a substantial

portion of her compensation in incentive stock options that she plans to exercise in qualifying dispositions. She will be taxed at long$-$

term capital gain rates. Why would she make this election instead of taking her compensation entirely as wages?

Stock held over a year is not subject to taxation.

Her W$-2$ wages is taxed is at a higher rate than her effective tax rate.

Her long$-$term capital gain rate is lower than her marginal tax rate.

Her long$-$term capital gain rate is higher than her marginal tax rate.