Megan Farley received $150,000 worth of incentive stock option (ISO) stock in November of last year that is exercisable for the first time during the next calendar year. Which of the following best describes the tax consequences that Megan faces as a result of the ISO?

The bargain element is

On what basis are stock options usually taxed when the option has no readily ascertainable fair market value?

Hugh Green’s employer, Jolly Foods, granted Hugh a stock option under its employee stock purchase plan to buy 200 shares of Jolly Foods stock for $10 per share when the market price was $13 per share. A year and a half later, when the stock had a value of $15 per share, Hugh exercised his option. Fourteen months later, when the stock was $17 per share, Hugh sold his stock. In the year of sale, Hugh had to report _____ as wages and _____ as capital gains.

Megan Farley received $150,000 worth of incentive stock option (ISO) stock in November of last year that is exercisable for the first time during the next calendar year. Which of the following best describes the tax consequences that Megan faces as a result of the ISO?

Executive Topdollar was given an option in 2011 to purchase 1,000 shares of Good Company stock at $200 per share, the 2014 market price. Topdollar can exercise the option anytime over the next 3 years. In 2015, Topdollar purchases 300 shares for a total of $60,000. The fair market value of the shares in 2015 is $100,000. Which of the following options best describes the tax consequences of Topdollar’s stock option?

If an individual made a contribution to a Roth IRA more than 5 years ago, which of the following permits a tax-free distribution from a Roth IRA?

Qualified plans require that the purchase of life insurance be governed by what are described as “incidental limits.” What is the limitation on purchasing life insurance in a profit sharing plan?

Disability benefits are subject to federal income tax withholding if paid directly by employer.

Disability benefits are subject to federal income tax withholding if paid directly by employer.