Question
In 2016, BT granted a nonqualified stock option to Ms. Pearl to buy 180 shares of BT stock at $46 per share for five years.
In 2016, BT granted a nonqualified stock option to Ms. Pearl to buy 180 shares of BT stock at $46 per share for five years. At date of grant, BT stock was trading on Nasdaq for $44.52 per share. In 2021, Ms. Pearl exercised the option when BTs stock was trading at $57.90 per share.
Required:
a. How much income did Ms. Pearl recognize in 2016 and 2021 because of the stock option?
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b. Compute Ms. Pearls basis in the 180 shares.
c.What are the tax consequences of the stock option to BT in 2016 and 2021?
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Managerial Accounting
Authors: Ronald W Hilton
7th Edition
0073022853, 978-0073022857
