salaries tax ( share option gain)

I think the answer should be $170,000 instead of $70,000

The share otpion gain is calculated as the difference from the market price on the date you exercised the option and the total costs.

Total costs = share cost + option cost
= $1 * 100,000 + $10,000
=$110,000
(note that "subscribe for 100,000 shares in his employer's parent company at $1 each" means the share cost, and "paid $10,000 for the option on that date" means the option cost; Mr. Li totally paid $110,000

On 1 Feb 05, share option gain =
$3.1 * 50,000 - $55,000 = $100,000
($5,000 as the costs as half shares were exercised, and so 1/2 of $10,000 as cost)

On 1 June 2005, share option gain =
$2.5 * 50,000 - $5,000 = $70,000

And so the total share option gain =
$100,000 + $70,000
=$170,000

I have are small problem, Mr Li sold on 30-1-2006, but you only supply 31-1-2006. in this case i assume it is same.

For tax.

4.2x100,000-10,000=410,000


Hope help you i only know the tax how to cal.