On January 22,2011,Dalton Corporation Granted Kathleen an Option to Acquire

Short Answer

On January 22,2011,Dalton Corporation granted Kathleen an option to acquire 1,500 shares of the company's stock for $ 7 per share.The fair market price of the stock on the date of grant was $13.The stock requires that Kathleen remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Kathleen exercises the option on August 10,2012,when the fair market value of the stock is $17.She makes a Section 83 (b)election at the exercise date.On August 10,2013,the fair market value of the stock is $23 per share.How much must she report as income in 2012 and 2013?
$\begin{array}{lll}&2012 & 2013 \\\text { a. } & \$-0- & \$ 15,000 \\\text { b. } & \$-0- & \$ 24,000 \\\text { c. } & \$ 10,500 & \$ 4,500 \\\text { d. } & \$ 15,000 & \$-0-\end{array}$