Maren Received 12 NQOs (Each Option Gives Her the Right

Multiple Choice

Maren received 12 NQOs (each option gives her the right to purchase 13 shares of stock for $10 per share) at the time she started working when the stock price was $8 per share. When the share price was $17 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $22 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

A) $0 gain and $0 tax
B) $780 gain and $156 tax
C) $780 gain and $289 tax
D) $1,872 gain and $374 tax