PRACTICE PROBLEM 3.9: STOCK OPTION BENEFITS In Year 1, an employee of a Canadian Controlled Private Corporation (CCPC) was granted options to buy 500 shares at a price of $12 per share. At this time the fair market value of the shares was $15 per share. In Year 2, when the shares have a fair market value of $17 per share, the employee exercises all of the stock options. In Year 3, the employee sells the shares for $20 per share. By what amount do these transactions increase her employment income, and when is the employment income inclusion recognized?