All of the longterm employees of Salter Inc. are allowed to participate in the company's stock option plan.
In January Sharon Poulter was granted options to acquire Salter Inc. shares at a price of $ per share.
At the time of exercise, the Salter Inc. shares have a FMV of $ per share.
On November the Salter Inc. shares are sold.
Required: Indicate the income tax effect for Sharon of the transactions and events that took place from to under each of the following independent cases. Your answer should include the effect on both net income and taxable income.
Case
Salter Inc. is a CCPC At the time the options were granted, the company's shares had a FMV of $ per share. The options are exercised on July When the shares are sold, the proceeds of dispositin are $ per share.
Case
Salter Inc. is a Canadian public corporation with gross revenues of $ million. At the time the options were granted, the corporation's shares were trading at $ per share. The options are exercised on July When the shares are sold, the proceeds of disposition are $ per share.
