Asked by Selena Dahabreh on May 02, 2024
Verified
Beverly works for a large publicly traded company and regularly receives incentive stock options as bonuses.In the current year,Beverly exercises options to purchase 1,000 shares at $48 per share when the market value is $72 per share.What is Beverly's AMT adjustment from the exercise of the options?
A) $24,000.
B) $48,000.
C) $72,000.
D) None of these.
Incentive Stock Options
A type of stock option that provides tax advantages for the employee, including delayed tax implications until the stock is sold.
AMT Adjustment
Adjustments and preferences added back to or subtracted from taxable income to calculate the Alternative Minimum Tax.
Market Value
The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion.
- Understand the principle of tax preference items and their impact on the Alternative Minimum Tax.
Verified Answer
Learning Objectives
- Understand the principle of tax preference items and their impact on the Alternative Minimum Tax.
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