2) For the following scenario, determine whether the book-tax difference (if any) in 2016 is favorable or unfavorable. On January 1, 2015, Landmark Corporation offered its CFO 2,500 NQOS options to purchase the company's at the same price offered by the public market on that day, $11/share, at any date in the future after the CFO vests. The CFO will vest 25% of its options in 2015, 25% in 2016 and vest the remaining portion in 2017. The CFO promptly exercised all of his options on December 31, 2017 when he was 100% vested and turned around and sold all the shares for $15/share on the public market. Assume that on the grant date, Landmark Corporation estimated the value of the options would be $4/share. The company uses a calendar year tax period. OI. Favorable O II. Not applicable as there is no book-tax difference III. Unfavorable

2) For the following scenario, determine whether the book-tax difference (if any) in 2016 is favorable or unfavorable. On January 1, 2015, Landmark Corporation offered its CFO 2,500 NQOS options to purchase the company's at the same price offered by the public market on that day, $11/share, at any date in the future after the CFO vests. The CFO will vest 25% of its options in 2015, 25% in 2016 and vest the remaining portion in 2017. The CFO promptly exercised all of his options on December 31, 2017 when he was 100% vested and turned around and sold all the shares for $15/share on the public market. Assume that on the grant date, Landmark Corporation estimated the value of the options would be $4/share. The company uses a calendar year tax period. OI. Favorable O II. Not applicable as there is no book-tax difference III. Unfavorable

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter12: Alternative Minimum Tax

Section: Chapter Questions

Problem 37P

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