Hi @GeorgeM777
In my example, let's just assume the sales price is $150, in which case the first option will be lower and will be used to calculate the amount of ordinary income.
Assuming then that option 1 is used, what you posted is different than what I see written on the irs.gov webpage (for some reason the hyperlink gets messed up when i post...), and this is the crux of my question:
- You: "The discount offered based on the offering date price" - I interpret this to be the FMV on the offering date times the discount, which is what I wrote as calculation (a)
- irs: "the amount by which the stock's FMV on the date of grant exceeds the option price" - I interpret this to be what I wrote as calculation (b). If the FMV on the option date is the same as the offering date FMV, the result of this calculation is the same as what you said. However, if the FMV on the option date is lower than the offering date price, it's not the same.
So what I'm trying to find out is, which one is correct?
