Ms. Merian Bytech, is an employee of Merlin Industries Ltd. During 2008. Ms. Byt

Question

Ms. Merian Bytech, is an employee of Merlin Industries Ltd. During 2008. Ms. Bytech was granted option to acquire 200,000 of her employers’ share at price of $15 per share. All of the options are vested at the time they are granted On August 1, 2010, all of the options are exercised. On this date, the Merlin Industries shares have a fair marker value of $22 per share On November 1, 2010, Ms. Bytech sells all of her Merlin Industries shares at $28 per share

Required

A. indicate the tax effect on Ms.Bytech with respect to the granting of the options and their exercise

B. Calculate the Taxable Capital Gains which Marlin would have to report on the tax return

Explanation / Answer

B. Short-term taxable capital gain = (200000 X ($28-$15)= $2600000

A . Tax rate 35 %

Tax on Short-termCapital Gain = $2600000X35%=$910000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.