Ms. Joan Hanson is an employee of a CCPC. In 2021, she is granted options to purchase 500 shares of her employer's common stock at a price of $22 per share. At this time, the FMV of the shares are estimated to be $20.50. In 2022, she exercises all of the options purchasing 500 shares. At this time, the estimated FMV of the shares are $31.50 per share. On December 1, 2022, she sells the shares for $38.75 per share. The net effect of the transactions on her 2022 taxable income would be: an increase of $6,562.50. an increase of $1,812.50. an increase of $2,375.00. an increase of $4,750.00. an increase of $4,187.50.
Ms. Joan Hanson is an employee of a CCPC. In 2021, she is granted options to purchase 500 shares of her employer's common stock at a price of $22 per share. At this time, the FMV of the shares are estimated to be $20.50. In 2022, she exercises all of the options purchasing 500 shares. At this time, the estimated FMV of the shares are $31.50 per share. On December 1, 2022, she sells the shares for $38.75 per share. The net effect of the transactions on her 2022 taxable income would be: an increase of $6,562.50. an increase of $1,812.50. an increase of $2,375.00. an increase of $4,750.00. an increase of $4,187.50.
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 54P
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subject-Accounting
Transcribed Image Text:Ms. Joan Hanson is an employee of a CCPC. In 2021, she is granted options to
purchase 500 shares of her employer's common stock at a price of $22 per share. At
this time, the FMV of the shares are estimated to be $20.50. In 2022, she exercises
all of the options purchasing 500 shares. At this time, the estimated FMV of the
shares are $31.50 per share. On December 1, 2022, she sells the shares for $38.75
per share. The net effect of the transactions on her 2022 taxable income would be:
an increase of $6,562.50.
an increase of $1,812.50.
an increase of $2,375.00.
an increase of $4,750.00.
O an increase of $4,187.50.
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