Reference no: EM132729143

Problem 1. Eric, who is single and 34 years old, has a salary of $140,000 from Florida State University and earns $100,000 in self-employment income. How much of Eric's income is subject to the additional Medicare tax?

Option 1: $0.
Option 2: $40,000.
Option 3: $140,000.
Option 4: $240,000 (all income is subject to the additional tax if the taxpayer is over the threshold).

Problem 2. On January 15, Year 1, Blake, a Senior Vice President for Acme Corporation, is granted 20,000 ISOs at an exercise price of $10. On February 6, Year 2, he exercises all his options when the price of Acme stock is $27. He sells the ISO shares three years later, when Acme stock is trading at $47 per share. What is his long-term capital gain per share?

Option 1: $47.
Option 2: $37.
Option 3: $27.
Option 4: $20.