How much tax will pay assuming marginal tax

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Problem 1: Maren received 11 NQOs (each option gives her the right to purchase 10 shares of stock for $9 per share) at the time she started working when the stock price was $7 per share. When the share price was $19 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

Option 1: $0 gain and $0 tax.
Option 2: $110 gain and $22 tax.
Option 3: $110 gain and $41 tax.
Option 4: $1,210 gain and $242 tax.

Reference no: EM132990381

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