Complete the problems listed below relating to BIO-SCI Corp for its employee, Jone Lee. For each...

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Accounting

Complete the problems listed below relating to BIO-SCI Corp forits employee, Jone Lee. For each event of each problem, indicate ifthis is a taxable event, amount of taxable income and character ofthe income. Also indicate the starting date for the holding periodof the underlying stock. (Note: Ignore AMT for all problems)
1. BIO-SCI issued Incentive StockOptions (ISO)to Jone as follows:
a. July 1, 2013 - Granted 200,000ISO’s (Exercise price = $10/share & FMV =$10/share). ?
Taxable event: No
b. June 15, 2014 – Exercised her50,000 ISO’s (FMV of stock = $16/share) ?
Taxable Event: No
c. October 20, 2015 – Sold 10,000shares of stock (Proceeds = $21/share) ?
Taxable event: YES, $21-$10= $11GAIN
Would your answer to c. change if the date were June 16,2015?

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3.8 Ratings (488 Votes)

ISO is one of the employee stock optionsISO gives employee a tax incentive by allowing one to pay ordinary income tax at exercise of options Taxable event taxable event under ISO Employee does not have to pay ordinary Income Tax at exercise of options the difference between fair market value and exercise price is subject to an AMT adjustment On the date of See Answer

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