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CFP® Practice Question of the Week: Tax Liability

Kevin’s non-qualified stock options are as follows:

  • 2,000 shares: strike price $34
  • 5,000 shares: strike price $30
  • Current stock price: $65
  • Kevin’s tax bracket: 42% (federal and state)

Kevin has decided to exercise the above stock option awards, which will expire in the next 2 years. Assuming he exercises them today, what is his tax liability?

  1.  $35,550
  2.  $68,250
  3.  $91,660
  4.  $99,540