This year, Gogo Inc. granted a nonqualified stock option to Mrs. Mill to buy 10,000 shares of Gogo stock for $8 per share for five years. At date of grant, Gogo stock was selling on a regional securities market for $787 per share. Gogo recorded $26,700 compensation expense for the estimated value of the option. Five years after Gogo granted the option to Mrs. Mill, she exercised it on a day when Gogo stock was selling for $10.31 per share. Required: a. How much income must Mrs. Mill recognize in the year of exercise? b. What is Gogo's tax deduction in the year of exercise? c. Assuming a 21 percent tax rate, what is the effect of the exercise on Gogo's book income and deferred taxes? Complete this question by entering your answers in the tabs below. Required A Required B Required C How much income must Mrs. Mill recognize in the year of exercise? Recognized income Complete this question by entering your answers in the tabs below. Required A Required B Required C How much income must Mrs. Mill recognize in the year of exercise? Recognized income Complete this question by entering your answers in the tabs below. Required A Required B Required C What is Gogo's tax deduction in the year of exercise? Tax deduction Complete this question by entering your answers in the tabs below. Required A Required B Required Assuming a 21 percent tax rate, what is the effect of the exercise on Gogo's book income and deferred taxes? Amount Gogo's book income