Incentive Stock Options (ISOs)
Wages: Sarah ($92,000)
Exercised Incentive Stock Options (ISOs):
Fair Market Value of the stock at exercise: $45,000
Exercise Price: $18,000
Holds the stock for over a year, then sells for $60,000
Interest and Dividend Income: $800
Itemized Deductions: $26,000
Allowable deduction for self-employment tax: None
Calculate:
AGI, Taxable Income, and Total Tax Liability in the year of option exercise.
AGI, Taxable Income, and Total Tax Liability in the year the stock is sold.