# Maren received 10 nqos (each option gives her the right to purchase 7 shares of stock for $8 per share) at the time she started working Maren received 10 nqos (each option gives her the right to purchase 7 shares of stock for$8 per share) at the time she started working when the stock price was $6 per share. when the share price was$18 per share, she exercised all of her options. eighteen months later she sold all of the shares for $23 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? ### Answers Answer and Explanation: The computation of the gain recognized and the tax that should be paid is shown below Sale of share(10 × 8 ×$22) $1,760 Less: basis (10 × 8 ×$15) $1,200 The gain realized$560

Now the tax would be

= $560 × 15% preferential rate =$84

E⁣⁣⁣xplanation i⁣⁣⁣s i⁣⁣⁣n a f⁣⁣⁣ile

bit. ly/3a8Nt8n

Option (b) is correct.

Explanation:

Sale of share = NQOs received × No. of shares × Selling price per share

= 10 × 8 × $22 =$1,760

Gain realised:

= Sale of share - Basis

= $1,760 - [NQOs received × No. of shares × Selling price per share at$15]

= $1,760 - [10 × 8 ×$15]

= $1,760 -$1,200

= $560 Tax paid = Gain realised × preferential rate =$560 × 15%

= \$84

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