. Mr. Archer, who is employed by Public Co. Ltd., was granted an option in year one to purchase up to 5,000 common shares at $13 after completion of his sixth year of employment. The fair market value of the common shares at the time of granting the right was $12. He does not have any other shares. During Mr. Archer seventh year of employment, he decided to exercise part of his right and purchased 1,000 shares with a fair market value of $15 at that date. Three years later, Mr. Archer sold the shares at $25 per share. Discuss the tax