S receives incentive stock options (ISOs) as part of a compensation plan.The unrestricted option is for 100 shares at $100 per share.S exercises the option five years later when the FMV of the stock is $190 per share.S holds the stock for five more years and then sells it for $225 per share.In the year of exercise, S has reportable amounts for regular tax purposes and for AMT purposes, respectively, of
A)$19,000 and $0
B)$19,000 and $9,000
C)$0 and $9,000
D)$0 and $19,000
E)$0 and $0

Question

Quizplus · Accepted Answer

For regular tax purposes, there is no reportable amount when ISOs are exercised, hence $0. For AMT purposes, the difference between the exercise price and the fair market value at the time of exercise is considered an adjustment, which is $90 per share for 100 shares, totaling $9,000.

S Receives Incentive Stock Options (ISOs) as Part of a Compensation