Tax Consequences of Equity-based Compensation 3-6. An employee was granted 100 Incentive Stock Options with an exercise price of $15/share. The employee exercised all of the options when the FMV was $25/share. The employee subsequently sold the stock several years after exercising the option for a price of $35/share. Using the above information, answer the following questions: (2 points total) a. What amount of taxable income does the employee recognize at the exercise date? Income: Character (circle one): Ordinary / Long-term Capital Gain b. What amount of taxable income does the employee recognize at the sale date? Income: Character (circle one): Ordinary / Long-term Capital Gain c. What amount of tax deduction does the employer recognize at the exercise date? 7-11. Assume the same facts as above, except that the options were Nonqualifying Stock Options instead of ISOs: (2.5 points total) a. What amount of taxable income does the employee recognize at the exercise date? Income: Character (circle one): Ordinary / Long-term Capital Gain b. What amount of taxable income does the employee recognize at the sale date? Income: Character (circle one): Ordinary / Long-term Capital Gain c. What amount of tax deduction does the employer recognize at the exercise date