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What taxable employment benefit arising from stock option

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Reference no: EM132775006

On December 1 of the current? year, Ms. Wong purchases 2,000 shares of Red Dog Ltd. under a stock option plan. Black Angus Ltd. is a public corporation. Ms. Wong provides you with the following? information:

  • bullet Stock Option granted on June 1 of the prior year and Fair Market Value? (FMV) at the? "grant" date? = ?$6?/share
  • bullet Option? price, offered to employees? = ?$6?/share
  • bullet Stock Option exercised on Nov. 1 of the current year and FMV at the? "exercise" date? = ?$10?/share

Problem 1: On December 31 of the current? year, Ms. Wong continues to own the 2,000 shares of Red Dog Ltd. The FMV of the shares on December 31 is ?$16 per share and Ms. Wong anticipates the share value will continue to increase. The taxable employment benefit arising from the stock option for Ms. Wong in the current year? is:

Choose the correct answer.

A. ?$0

B. $ 8,000

C. ?$20,000

D. ?$12,000

Reference no: EM132775006

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