Question 1
Johanna is single and self-employed as a technology consultant. She wants to set money aside for her retirement. What tax and financial issues should she consider?
Question 2
Ruby Corporation grants stock options to Iris on February 1, 2015. The options do not have a readily ascertainable value. The option price is $100, and the FMV of the Ruby stock is also $100 on the grant date. The option allows Iris to purchase 200 shares of Ruby stock. Iris exercises the option on August 1, 2016, when the stock's FMV is $150. Iris sells the stock on December 5, 2017 for $400. Determine the amount and character (i.e. ordinary, LTCG or STCG) of income recognized by Iris and the deduction allowed Ruby Corporation in 2015, 2016 and 2017 under the following assumptions:
a. The stock option is an incentive stock option.
b. The stock option is a nonqualified stock option.