What are cutter corporation tax consequences

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Question - Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $17 per share) at the time he started working for Cutter Corporation three years ago. Cutter's stock price was $17 per share. Yost exercised all of his options when the share price was $26 per share. Two years after acquiring the shares, he sold them at $53 per share. (Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.)

Required -

a. What are Yost's amount of income/gain recognized and amount of taxes payable on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent?

b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sells the shares?

Reference no: EM132567090

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