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, 2017, when the fair market value is $120 per share. She holds the stock for only seven months and sells the shares for $140 per share. Determine the recognized gain on the sale and classify it as capital or ordinary.

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