On January 22,2011,Dalton Corporation Granted Kathleen an Option to Acquire $2012 \quad\quad \quad 2013$

Short Answer

On January 22,2011,Dalton Corporation granted Kathleen an option to acquire 1,500 shares of the company's stock for $ 7 per share.The fair market price of the stock on the date of grant was $13.The stock requires that Kathleen remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Kathleen exercises the option on August 10,2012,when the fair market value of the stock is $17.She makes a Section 83 (b)election at the exercise date.On August 10,2013,the fair market value of the stock is $23 per share.How much must she report as income in 2012 and 2013?
$2012 \quad\quad \quad 2013$
a. $\$ - 0$ - $\quad \$ 15,000$
b. $\$ - 0$ - $\quad \$ 24,000$
c. $\$ 10,500 \quad \$ 4,500$
d. $\$ 15,000 \quad \$ - 0 -$