Question

June Inc. issued 9,000 nonqualified stock options valued at $27,000. Each option entitles the holder to purchase one share of stock at $5 per share. The options vest over three years–one-third in 2018 (the year of issue), one-third in 2019, and one-third in 2020. Three thousand options are exercised in 2019 at a time when the stock price of the stock was $9. What is the 2019 book-tax difference associated with the stock options?

Answer 1

Answer:

The right solution is "$3,000 favorable".

Explanation:

The standard taxation deduction throughout the year 2019 is nothing more than the differentiation seen between strike amount of $9 as well as the market value of the company stock of $5.

Besides book specific reason, calculated by multiplying the total number of possibilities used:

⇒ $(9-5)\times 3000$

⇒ $4\times 3000$

⇒ $12000$

The manuscript deduction seems to be the valuation of the relevant guidelines throughout the year 2019:

⇒ $\frac{1}{3}\times 27000$

⇒ $9000$

Therefore the large amounts book deduction of 3000 seems to be definitely favorable.