Bad Brad Received 20 NQOs (Each Option Gives Him the Right

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $12 per share) from his employer. At the time he started working, the stock price was $11 per share. Now that the share price is $25 per share, he exercises all of the options. Two years later Bad Brad sells the stock for $27 per share. What is Bad Brad's basis in his stock for purposes of calculating the gain or loss at the time of the sale?

A) $16,200.
B) $15,000.
C) $7,200.
D) $7,800.

Correct Answer:

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