What are the tax implications under each scenario? Be sure to discuss what constitutes a Qualifying Disposition, a Disqualifying Disposition, and the Bargain Element. A client comes to you with a request to learn of the tax consequences associated with some stock options. What do you recommend? The specifics: Case I 1) Grant date: January 1, 2018 2) Exercise price: $20/ share for 1,000 shares 3) Exercise date: March 1, 2020 4) FMV on exercise date: $100/ share 5) Sell the shares on April 1,2021 6) Stock price on April 1, 2021 is $120 /share. 7) Tax bracket is 24%.

1. What are the tax implications under each scenario?
Be sure to discuss what constitutes a Qualifying Disposition, a Disqualifying Disposition,
and the Bargain Element. A client comes to you with a request to learn of the tax consequences
associated with some stock options. What do you recommend? The specifics: Case I 1) Grant
date: January 1, 2018 2) Exercise price: $20/ share for 1,000 shares 3) Exercise date: March 1,
2020 4) FMV on exercise date: $100/ share 5) Sell the shares on April 1,2021 6) Stock price on
April 1, 2021 is $120 /share. 7) Tax bracket is 24%