In 2018, an employee of a public corporation (Pubco) received a stock option to acquire 1,500 Pubco shares at a price of $15 per share. The market price of the shares at that time was $18. In 2019, the employee exercised the option (purchased the shares) when the market price was $20. In 2020, the employee sold the shares at $24. What would be the employee's taxable capital gain in 2020?
In 2018, an employee of a public corporation (Pubco) received a stock option to acquire 1,500 Pubco shares at a price of $15 per share. The market price of the shares at that time was $18. In 2019, the employee exercised the option (purchased the shares) when the market price was $20. In 2020, the employee sold the shares at $24. What would be the employee's taxable capital gain in 2020?
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 25CE
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Transcribed Image Text:In 2018, an employee of a public corporation (Pubco) received a stock option to acquire
1,500 Pubco shares at a price of $15 per share. The market price of the shares at that
time was $18. In 2019, the employee exercised the option (purchased the shares) when
the market price was $20. In 2020, the employee sold the shares at $24. What would be
the employee's taxable capital gain in 2020?
A. $3,000
B. $5,000
C. $4,000
D.$2,000
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