Required information Skip to question [The following information applies to the questions displayed below.] Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $40 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $40 per share. Yost exercised all of his options when the share price was $80 per share. Two years after acquiring the shares, he sold them at $122 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.

To answer any questions related to Yost's NQOs, we need to calculate the financial impact at each stage: exercise and sale. Since no specific question was provided, I'll outline the general tax implications for Yost at each stage. **Exercise of NQOs:** When Yost exercises his NQOs, he will have to report compensation income equal to the difference between the stock's market price on the exercise date and the exercise price of the options. This income is taxed at his ordinary income tax rate. Number of shares: 300 options * 10 shares/option = 3,000 shares Exercise price: $40 per share Market price at exercise: $80 per share Compensation income: ($80 - $40) * 3,000 shares = $120,000 Yost will report $120,000 as ordinary income in the year he exercises the options, which will be taxed at his marginal tax rate. **Sale of Shares:** Two years after exercising the options, Yost sells the shares. Since he held the shares for more than one year, any profit from the sale will be considered a long-term capital gain, which is typically taxed at a lower rate than ordinary income. Sale price per share: $122 Market price at exercise (cost basis): $80 per share Long-term capital gain: ($122 - $80) * 3,000 shares = $126,000 Yost will report a

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