Calculate the gain or loss and explain whether the gain

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Reference no: EM131695125

Compensation Assignment- A company granted stock options to the following employees including their exercise and sale details:

Employee Name

Date

Option Given

Total Number of Stock Options Granted

Fair Market Value on

the Date of Stock

Options

Date the Employee Actually Exercised the option

Date the Employee Sold the stocks

Price at which the employee sold the stocks

Total Stocks Sold

Joseph

4/21/2009

1500

$55

5/1/2010

4/21/2011

$72

1200

Brandy

3/31/2008

4500

$48

4/1/2010

4/1/2011

$59

4000

Turner

5/3/2007

2000

$32

3/1/2009

4/5/2012

$48

2000


Your Assignment:

Read the lecture notes on incentive stock options (ISOs). For each of the employees,

a. Determine if the stock options meet the requirements for an ISO or not. If not, what changes would you recommend to the company to make it as a qualified stock option?

b. Calculate the gain or loss and explain whether the gain or loss is to be treated as ordinary income or capital gains.
Note: If some information is missing, you can assume that the conditions are met for ISOs. For example, you can assume that the board of directors approved the grant of the options within the time period specified

Reference no: EM131695125

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