QUESTION 19Which of the following compensation plans gives employees the right to purchase shares…

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➤ Are there tax consequences when exercising stock options?
Yes. Tax treatment depends on option type. Non‑qualified options create ordinary income on the spread at exercise. Incentive stock options can defer ordinary tax but may trigger alternative minimum tax and lead to capital gains or losses upon sale. Holding periods determine short‑ or long‑term capital gains rates.

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