Marvin, the Vice President of Lavender, Inc

Multiple Choice

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2012. The stock options are incentive stock options (ISOs) . Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2009 and all restrictions on the free transferability had lapsed by the exercise date.

A) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a positive adjustment of $800.
B) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is $0.
C) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a negative adjustment of $800.
D) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is a negative adjustment of $1,000.
E) None of the above.