Which of the following is true regarding stock options?

a$.$ A loss is realized when stock options lapse.

b$.$ There is typically no tax effect on the grant date.

c$.$ Income recognized on the exercise date is greater for incentive stock options than nonqualified options.

d$.$ The bargain element on a nonqualified option is taxed to employees at capital gain rates.

Maren received $10$ NQOs $($each option gives her the right to purchase $10$ shares of stock for $$8$ per share$)$ at the time she started working when the stock price was $$6$ per share. When the share price was $$15$ per share, she exercised all of her options. Eighteen months later, she sold all of the shares for $$20$ per share. What is the amount of Maren's bargain element?

a$.$ $$0$

$($b$)$ $$700$

c$.$ $$900$

d$.$ $$1,500$

e$.$ None of the choices are correct.

Maren received $10$ NQOs $($each option gives her the right to purchase $10$ shares of stock for $$8$ per share$)$ at the time she started working when the stock price was $$6$ per share. When the share price was $$15$ per share, she exercised all of her options. Eighteen months later, she sold all of the shares for $$20$ per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is $37$ percent long$-$term capital gain tax rate is $20\%?$

a$.$ $$0$ gain and $$0$ tax

so

b$.$ $$500$ gain and $$100$ tax

c$.$ $$500$ gain and $$185$ tax

d$.$ $$1,200$ gain and $$240$ tax

Which of the following statements regarding restricted stock is false?

a$.$ Like stock options, restricted stock has to vest before it can be sold.

b$.$ Like nonqualified stock options, the employee's income inclusion for restricted stock is the bargain element.

C$.$ Even if the value of restricted stock decreases from the price on the grant date, it retains some value to the employee.

d$.$ There are effective tax planning elections for restricted stock.

Tom recently received $2,000$ shares of restricted stock from his employer, Independence Corporation, when the share price was $$10$ per share. Tom's restricted shares vested three years later when the market price was $$14.$ Tom held the shares for a little more than three years and sold them when the market price was $$20.$ What is the amount of Tom's income or loss on the vesting date $($assuming no $83b$ election is made$)?$

a$.$ $$0$

b$.$ $$10,000$

c$.$ $$20,000$

d$.$ $$28,000$