Once again, you have just been asked for advice on employee stock options by two different clients. This is a continuation of problem Module 4-2.

1. Omer is part of the management team of a Canadian public company and is eligible for the employee stock option plan. A few years ago he received an option on 1,000 shares. The option required him to pay the option price of $30 (the value at the time the option was granted) for the shares at the time he exercises his option.

Omer exercised the option three years ago when the shares were worth $35 and is now selling the shares for $45. He has asked you to tell him the amount of income he will have to report in 2013.

2. Hilda is part of the management team of a Canadian-controlled private company and is eligible for the employee stock option plan. A few years ago she received an option on 1,000 shares. The option required her to pay the option price of $30 (the value at the time the option was granted) for the shares at the time she exercises her option.

Hilda exercised the option three years ago when the shares were worth $35 and is now selling the shares for $45. She has asked you to tell her the amount of income she will have to report in 2013.