On November 19, 2019, Rex is granted a nonqualified stock option to purchase 100 shares of Tan

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On November 19, 2019, Rex is granted a nonqualified stock option to purchase 100 shares of Tan Company. On that date, the stock is selling for $8 per share, and the option price is $9 per share. Rex exercises the option on August 21, 2020, when the stock is selling for $10 per share. Five months later Rex sells the shares for $11.50 per share.

a. What amount is taxable to Rex in 2019?

b. What amount is taxable to Rex in 2020?

c. What amount and type of gain are taxable to Rex in 2021?

d. What amount, if any, is deductible by Tan Company in 2020?

e. What amount, if any, is recognized in 2020 if the stock is sold for $9.50 per share?

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Answer aNo gain is recognized on the grant date since the options have no ...View the full answer

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ISBN: 9780357519073

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Authors: James C. Young, Annette Nellen, William A. Raabe, Mark Persellin, William H. Hoffman

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Question Posted: Jul 26, 2022 01:02 AM

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On November 19, 2019, Rex is granted a nonqualified stock option to purchase 100 shares of Tan

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Answer aNo gain is recognized on the grant date since the options have no ...View the full answer

South-Western Federal Taxation 2022 Individual Income Taxes

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