Exercise of the sars

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Four years ago, Handcock Corporation granted 300 SARs to Maria as a bonus. Handcock's stock was worth $20 a share on the date of grant. Maria exercises her SARs this year when the stock is worth $60 a share.

a. How much income should Maria have recognized in the year she received the SARs?

b. How much income does Maria recognize when she exercises the SARs?

c. If Maria is in the 35 percent marginal tax bracket, what is her after-tax cash flow from the exercise of the SARs?

d. Does Handcock Corporation get a tax deduction for the SARs and if yes, when and in what amount?

Reference no: EM131069560

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