Imperial Construction Inc

Imperial Construction Inc.(IC)issued 100,000 incentive stock options (ISOs)to its employees on December 31, 2018, with an estimated value of $5.50 per option.The options vest at 25 percent per year for four years (beginning on December 31, 2019).Each option allows the holder to purchase one share of stock at $8.On December 31, 2019, employees exercised 12,500 options when IC's stock was valued at $14.72 per share.What is the amount of the book-tax difference in 2019 associated with the incentive stock options? Is it favorable or unfavorable? Is it temporary or permanent?

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$137,500 unfavorable...

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