Valquez Alura, an executive with Harbor Millwork is covered under her company's incentive stock option (ISO) plan. Under the plan, Valquez was granted an option in 2018 to purchase company stock for $50 per share. In March of 2020, Valquez exercised this option and purchases 100 shares for $5,000. The fair market value of the shares when she exercised the option was $7,500. In April of 2021, she sold the 100 shares for $10,000. Suppose she remained in the 22% tax bracket over the years. The figure shows the relative level of the tax brackets for ordinary income tax and long-term capital gain using 2019 as an example. ORDINARY, LONG-TERM CAPITAL & QUALIFIED DIVIDEND RATES: INDIVIDUAL VS. MARRIED FILING JOINTLY Income Up To... Individual Ordinary Income Tax Rate Capital Gains Tax Rate Income Up To... Ordinary Income Tax Rate Married Filing Jointly Capital Gains Tax Rate $9.700 10% $19,400 10% 0% 0% $39,375 $78,750 12% 12% $39,475 $78,950 $84.200 22% $168,400 22% 15% 15% $160.725 24% $250,000* 24% $200,000* $321,450 32% $204,100 $408,200 32% 18.8% 18.8% $434,550 $488,850 35% 35% $510,300 $612,350 23.8% 23.8% $510,300+ 37% $612.350+ 37% *Based on AGI instead of Taxable Income Michael Kitces, www.kitces.com Is this qualifying disposition? Explain your answer. How much tax does Valquez have to pay for the 2020 tax year (if no tax is due, answer "O")? $