Problem 4: Equity Based Compensation Grant Date: $6 January 1, year 1 Vesting Date: $16 January 1, year 3 Exercise Date: $24 January 1, year 5 Sale Date: $30 January 1, year 7 Jo Jo receives the following equity based compensation from her employer High Top Shoes Corp.: 1,000 NQO, where each NQO gives her the right to purchase 1 share (1,000 shares total), with an exercise price of $6 per share, 2-year vesting period and 10-year expiration period. The applicable days and trading price of the stock on each day is listed above. 1,000 ISO, where each ISO gives her the right to purchase 1 share (1,000 shares total), with an exercise price of $6 per share, 2-year vesting period and 10-year expiration period. The applicable days and trading price of the stock on each day is listed above. 1,000 shares of restricted stock, with a 2-year vesting period. The applicable days and trading price of the stock on each day is listed above. In all problems assume all shares are exercised, sold, etc. A) How much income/gain is recognized and what is the character of the income/gain on the grant date, vesting date, exercise date, and sale date for the NQO? B) How much income/gain is recognized and what is the character of the income/gain on the grant date, vesting date, exercise date, and sale date for the ISO? C) How much income/gain is recognized and what is the character of the income/gain on the grant date, vesting date, and sale date for the restricted stock? D) If the stock is worth $10 on the sale date, what is the income/gain recognized and character of the income/gain for the NQO on the sale date? E) If Jo Jo sells the ISO on December 31, year 5 when the stock is worth $28, what is the income/gain recognized?