Tad Is a Vice-President of Ruby Corporation

Multiple Choice

Tad is a vice-president of Ruby Corporation. In 2012, he acquired 800 shares of Ruby Corporation stock under the corporation's incentive stock option (ISO) plan for an option price of $33 per share. At the date of exercise in 2012, the fair market value of the stock was $43 per share. The stock became freely transferable in 2013. Tad sold the 800 shares for $50 per share in 2014. Which of the following statements is incorrect?

A) Acquisition of the stock in 2012 had no effect on Tad's taxable income, but increased AMTI by $8,000 in 2012.
B) Tad's regular income tax basis for the stock is $26,400 and his AMT basis is $34,400 in 2012.
C) Tad must report a negative AMT adjustment of $5,000 in 2013.
D) Tad will have a positive AMT adjustment of $5,000 in 2014.
E) All of the above are correct.