Stock Options . Bender Corpo ration grants a nonqualified
stock option to Penny, an employee, on January 1, 2019, that entitled Penny to
acquire 1,000 shares of Bender stock at $80 per share. On this date, the stock
has a $100 FMV and the option has a readily ascertainable FMV of $20 per share.
Penny exercises the option on January 1, 2020 (when the FMV of the stock is
$150 ), and acquires 1,000 shares of the stock for $80 per share. Penny later
sells the Bender stock on January 1, 2022, for $200 per share.
sa. What are the tax consequences to Penny and Bender
Corporation on the following dates: January 1, 2019; January 1, 2020; and
January 1, 2022?
b. How would your answer to Part a change if the Bender
stock were instead closely-held and the option had no readily ascertainable
FMV?
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