How much income should mark have recognized

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Five years ago, Cargo Corporation granted a nonqualified stock option to Mark to buy 3,000 shares of Cargo common stock at $10 per share exercisable for five years. At the date of the grant, Cargo stock was selling for $9 per share. This year, Mark exercises the option when the price is $50 per share.

a. How much income should Mark have recognized in the year the option was granted?

b. How much income does Mark recognize when he exercises the option?

What are the tax consequences for Cargo from the NQSO in the year of grant and in the year of exercise?

Reference no: EM13517107

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