R1 - Employee Stock Options Flashcards
1
Q
Under an Incentive Stock Option, how much income is recognized at the date of grant?
A
No income is recognized at the date of grant for an ISO
2
Q
How is a gain calculated under an ISO?
A
Market price on sale date - market price on grant date
3
Q
Under a non-qualified stock option plan, how much income is recognized at the date of grant?
A
An amount equal to the ascertainable value; if not ascertainable, the value of (FMV @ exercise date - FMV @ grant date)
4
Q
How is basis calculated for a non-qualified stock option?
A
FMV at date of exercise + amount previously recognized (usually at grant date)
5
Q
How is capital gain calculated on a non-qualified stock option?
A
Sales price - basis (FMV at date of exercise + amount previously recognized)
