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Incentive Stock Option Consequences

Antonio received 40 ISOs at the time he started working for Zorro Corporation six years ago (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share). Zorro's share price was $3 per share at the time. Now that Zorro's share price is $50 per share, he intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Required:

(a) What are Antonio's tax consequences on the grant date, the exercise date, and the date the shares are sold assuming his ordinary marginal rate is 30 percent and his long-term capital gains rate is 15 percent?

Tax Paid
Grant date $
Exercise date & sale date $

Solution Preview

Required:

(a) What are Antonio's tax consequences on the grant date, the exercise date, and the date the shares are sold assuming his ordinary marginal rate is 30 percent and his long-term capital gains rate is 15 percent?

Tax Paid 5640
Grant date $ ...

Solution Summary

This solution details the tax consequences of an Incentive Stock Option from the perspective of the taxpayer option holder.

$2.19