On January 1st, three years ago, Randy was awarded 15,000 ISOs at an exercise pr
ID: 2426764 • Letter: O
Question
On January 1st, three years ago, Randy was awarded 15,000 ISOs at an exercise price of $3 per share when the fair market value of the stock was equal to $3. On April 17th this year, Randy exercised all of his ISOs when the fair market value of the stock was $5 per share. At the date of exercise, what are the tax consequences to Randy?
(a) $0 W-2 income, $30,000 AMT adjustment.
(b) $0 W-2 income, $75,000 AMT adjustment.
(c) $30,000 ordinary income, $30,000 AMT adjustment.
(d) $75,000 ordinary income, $0 AMT adjustment.
(a) $0 W-2 income, $30,000 AMT adjustment.
(b) $0 W-2 income, $75,000 AMT adjustment.
(c) $30,000 ordinary income, $30,000 AMT adjustment.
(d) $75,000 ordinary income, $0 AMT adjustment.
Explanation / Answer
Option b ($0 W-2 income, $75,000 AMT adjustment.) is correct.
Remaining options incorrect since these are not having correct answer.