Maren received 11 NQOs (each option gives her the right to purchase 12 shares of stock for $9 per share) at the time she started working when the stock price was $7 per share. When the share price was $16 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $21 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

Question

Business

Dominick Levy

5 June, 23:00

Maren received 11 NQOs (each option gives her the right to purchase 12 shares of stock for $9 per share) at the time she started working when the stock price was $7 per share. When the share price was $16 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $21 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

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Tickles · Answer 1

Maren's basis for the stocks = 132 stocks x $16 = $2,112

18 months later when she sold her stock at $21 per stock, she received $2,772 ( = $21 x 12 socks)

Maren's gain = $2,772 - $2,112 = $660

Maren's gain shouldn't be considered as marginal income since it is a capital gain.

I guess we could assume she has to pay the highest rate = 20% x $660 = $132