Two years ago, ABC Inc. granted an ISO to Jim to buy 5,000 shares of ABC Inc. stock at $10 per share exercisable for five years. At the date of the grant, the stock was selling for $9 per share. This year, Jim exercises the ISO when the price is $25 per share.

a. How much income should Jim have recognized in the year the ISO was granted?

b. How much income does Jim recognize when she exercises the ISO?

c. If Jim holds the stock for 3 years and sells them for $28, how much income must he recognize?