Valerie receives 100 incentive stock options from her employer in Year 1 when the underlying stock has a value of $20 per share. In Year 2 she exercises all the options at the option price of $25 when the value of the stock is $28. In Year 5, the current year, Valerie sells all 100 shares for $30. How much gross income must Valerie report in Year 2 and in Year 5 when computing regular taxable income?

Year 2 Year 5

Group of answer choices

$300 $ 700

$500 $ 500

$ 0 $1,000

$ 0 $ 500