Exercised an incentive stock option


Betsy, a corporate executive, exercised an incentive stock option ("ISO") granted by Betsy's employer to purchase 10,000 shares of the corporation's stock at the option price of $1 per share (i.e., the exercise price was $1 per share). The stock is freely transferable. At the time the option was exercised, the stock was selling for $11 per share. What is the AMT adjustment that results from Betsy exercising the ISO (assume that Betsy will NOT dispose of any of the stock during the year)?

a. $110,000

b. $100,000

c. $10,000

d. $0

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Accounting Basics: Exercised an incentive stock option
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