Tad Is a Vice-President of Ruby Corporation

Multiple Choice

Tad is a vice-president of Ruby Corporation.In 2010,he acquired 1,000 shares of Ruby Corporation stock under the corporation's incentive stock option (ISO) plan for an option price of $43 per share.At the date of exercise in 2010,the fair market value of the stock was $65 per share.The stock became freely transferable in 2011.Tad sold the 1,000 shares for $69 per share in 2012.Which of the following statements is incorrect?

A) Acquisition of the stock in 2010 had no effect on Tad's taxable income,but increased AMTI by $22,000 in 2010.
B) Tad's regular income tax basis for the stock is $43,000 and his AMT basis is $65,000 in 2011.
C) Tad must report a positive AMT adjustment of $22,000 in 2011.
D) Tad will have a negative AMT adjustment of $22,000 in 2012.
E) All of the above are correct.