Question - Steeple Corp. granted an incentive stock option ("ISO") to Regina, an employee, on January 1, 2010, when the option price and FMV of the Steeple stock was $80. The option entitled Regina to buy 10 shares of Steeple stock. Regina exercised the option and acquired the Steeple stock on April 1, 2012, when the stock's FMV was $100. Regina, while still employed by the Steeple Corp., sold the stock on May 1, 2014, for $120 per share.
(a) What are the tax consequences to Regina and Steeple Corp. on the following dates: January 1, 2010; April 1, 2012; and May 1, 2014? (Assume all ISO qualifications are satisfied.)
(b) How would your answer to part (a) change if Regina instead sold the Steeple stock for $130 per share on May 1, 2012?