Essay
On November 19, 2018, Rex is granted a nonqualified stock option to purchase 100 shares of Tan Company.On that date, the stock is selling for $8 per share, and the option price is $9 per share.Rex exercises the option on August 21,
2019, when the stock is selling for $10 per share.Five months later, Rex sells the shares for $11.50 per share.
a.What amount is included in Rex's gross income in 2018?
b.What amount is included in Rex's gross income in 2019?
c.What amount and type of gain is recognized by Rex in 2020?
d.What amount, if any, is deductible by Tan Company in 2019?
e.What amount, if any, is recognized in 2019 if the stock is sold for $9.50 per share?
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a.No gain is recognized on the grant dat...View Answer
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