Marvin, the Vice President of Lavender, Inc

Multiple Choice

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2014. The stock options are incentive stock options (ISOs) . Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2010 and all restrictions on the free transferability had lapsed by the exercise date.

A) If Marvin sells the stock in December 2014 for $3,000, his AMT adjustment in 2014 is a positive adjustment of $800.
B) If Marvin sells the stock in December 2015 for $3,000, his AMT adjustment in 2015 is $0.
C) If Marvin sells the stock in December 2014 for $3,000, his AMT adjustment in 2014 is a negative adjustment of $800.
D) If Marvin sells the stock in December 2015 for $3,000, his AMT adjustment in 2015 is a negative adjustment of $1,000.
E) None of the above.