Return to quest. 9 Assume that on January 1, year 1, XYZ Corporation issued 1,000 nonqualified stock options with an estimated value of $4 per option. Each option entitles the owner to purchase one share of XYZ stock for $14 a share the per share price of XYZ stock on January 1, year 1, when the options were granted). The options vest 25 percent a year (on December 31) for four years (beginning with year 1). All 500 stock options that had vested to that point were exercised in year 3 when the XYZ stock was valued at $20 per share. No other options were exercised in year 3 or year 4. 0.44 points Identify XYZ's year 1, 2, 3, and 4 tax deductions and book-tax difference (identify as permanent and/or temporary) associated with the stock options. Answer is not complete. Year 1 Year 3 Book-Tax Favorable! differences Unfavorable $ 0 X Unfavorable Temporary Permanent Temporary Year 2 Book-Tax Favorable! differences Unfavorable $ 0 X Unfavorable Temporary Permanent Temporary Book-Tax Favorable! differences Unfavorable S 3,000 X Favorable Temporary Permanent Year 4 Book-Tax Favorable! differences Unfavorable $ 0 X Unfavorable Temporary Permanent Temporary Nonqualified Stock Options Permanent