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Short Answer Problem – 3 Points Possible – You must show you…

Short Answer Problem – 3 Points Possible – You must show your work below to receive any credit. TechTron, Inc. grants an incentive stock option (ISO) to Alecia, one of its engineers, on January 1, 20X1.  On that date, TechTron common stock is trading (on an established stock exchange) for $15.00/Share (FMV).  In accord with ISO requirements, TechTron sets Alecia’s strike price (option price) at that same amount.  The terms of the option contract permit Alecia to purchase 500 shares of TechTron common stock at the above strike price at any time within the five years following the date of grant.  Assume Alecia exercises her option and on June 16, 20X3, purchases all 500 shares of TechTron common stock.  The FMV of TechTron common stock on that date is $21.00/share.  Alecia, still employed by TechTron, sells all 500 of these shares on September 9, 20X5 for the then FMV of $26.00/share. Please briefly discuss (supported with any appropriate computations/numbers) the following: The amount and character of any income realized/recognized by Alecia on January 1, 20X1. The amount and character of any income realized/recognized by Alecia on June 16, 20X3. The amount and character of any gain/loss realized/recognized by Alecia on September 9, 20X5.