Business Taxation – Rollo IncSix years ago, Rollo Inc., gained a nonqualified stock option to Mrs. Jacques to buy 5,000 shares of Rollo stock per $15 per share for six years. At the date of grant, Rollo stock was selling on the AMEX for $14.75 per share. This year, Mr. Jacques exercised the option when the price was $45.10 per share.1. How much compensation income did Mrs. Jacques recognize
in the year the option was granted?2. How much compensation income did Mrs. Jacques recognize
in the year she exercised the option?
3. Did Rollo have any tax consequences from the option in
the year of grant or in the year of exercise?