Equity-Based Salary 

(1) Shares acquired: 3,000

(2) Exercise price: $15.00

(3) Cash needed to exercise: $45,000

(4) Market price: $26.00

(5) Market value of shares: $78,000

(6) Bargain Element (ordinary income): $33,000

(7) Marginal Tax Rate: 35%

(8) Tax due in year of exercise: $11,550

(9) Shares acquired with NQOs: 3,000

(10) Market price at sale: $47.00

(11) Amount Realized: $141,000

(12) Basis: $78,000

(13) Long-term capital gain: $63,000

(14) Capital Gain Tax Rate: 15%

(15) Tax due in year of sale: $9,450

(16) Employer Deduction (at exercise): $33,000

(17) Employer Marginal Tax Rate: 21%

(18) Employer Tax Savings: $6,930

(19) Cash needed for same-day sale: $56,550

(20) Shares needed to be sold: 2,175

(1) Shares acquired: 3,000

(2) Exercise price: $20.00

(3) Maximum market price: $18.00

(4) Status: Underwater (Market price < Exercise price)

(5) Yost's Action: Options expire unexercised

(6) Yost's tax due (Grant date): $0

(7) Yost's tax due (Exercise date): $0

(8) Yost's tax due (Sale date): $0

(9) Cutter Corp's deduction: $0

(10) Cutter Corp's tax savings: $0