Martin Corporation Granted a Nonqualified Stock Option to Employee Caroline $$\begin{array} { | l | l | } \hline 2018 & 2019 \\\hline 100,000 \text { ordinary income } & \$ 50,000 \text { LTCG } \\\hline\end{array}$$

Multiple Choice

Martin Corporation granted a nonqualified stock option to employee Caroline on January 1,2014.The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 1,000 shares of Martin stock.The option itself does not have a readily ascertainable FMV.Caroline exercised the option on August 1,2018,when the stock's FMV was $250.If Caroline sells the stock on September 5,2019,for $300 per share,she must recognize

A) $$\begin{array} { | l | l | } \hline 2018 & 2019 \\\hline 100,000 \text { ordinary income } & \$ 50,000 \text { LTCG } \\\hline\end{array}$$
B) $$\begin{array} { | l | l | } \hline 2018 & 2019 \\\hline 0 & \$ 150,000 \text { LTCG } \\\hline\end{array}$$
C) $$\begin{array} { | l | l | } \hline 2 018 & 2019 \\\hline 100,000 \text { ordinary income } & \$ 50,000 \text { ordinary income } \\\hline\end{array}$$
D) $$\begin{array} { | l | l | } \hline 2018 & 2019 \\\hline 0 & \$ 150,000 \text { ordinary income } \\\hline\end{array}$$