Yvonne Exercises Incentive Stock Options (ISOs)for 100 Shares of Apple

Multiple Choice

Yvonne exercises incentive stock options (ISOs) for 100 shares of Apple Corporation stock at the option price of $100 per share on May 21,2016,when the fair market value is $120 per share.She sells the 100 shares of stock 3 1/2 years later for $140.Determine the recognized gain on the sale and classify it as capital or ordinary.

A) $2,000 LTCG.
B) $2,000 ordinary income.
C) $4,000 LTCG.
D) $4,000 ordinary income.
E) None of the above.