Author Question: Wilson Corporation granted an incentive stock option to Reva on January 1, two years ago. The option ... (Read 81 times)

codyclark · **on:** Sep 13, 2020

Question 1

Which statement is correct regarding SIMPLE retirement plans?
◦ SIMPLE plans are not subject to nondiscrimination rules.
◦ This plan can only be adopted by employers with 50 or fewer employees.
◦ Only the employer can contribute to the plan.
◦ Employer contributions must vest within three years.

Question 2

Wilson Corporation granted an incentive stock option to Reva on January 1, two years ago. The option price was $300, and the FMV of the Wilson stock was also $300 on the grant date. The option allowed Reva to purchase 150 shares of Wilson stock. Reva exercised the option on August 1, this year, when the stock's FMV was $400. Unless otherwise stated, assume Reva is a qualifying employee. The results of the above transactions to Reva will be
◦ no income to Reva on the grant date or exercise date but there is an alternative minimum tax adjustment item to Reva of $15,000.
◦ no income tax or alternative minimum tax effect for Reva.
◦ ordinary income to Reva on the exercise date of $15,000.
◦ capital gain to Reva on the exercise date of $15,000.

leannegxo · **Reply #1 on:** Sep 13, 2020

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