Bruce Receives 20 Stock Rights in a Nontaxable Distribution

Bruce receives 20 stock rights in a nontaxable distribution. The stock rights have an FMV of $5,000. The common stock with respect to which the rights are issued has a basis of $4,000 and an FMV of $120,000. Bruce allows the stock rights to lapse. He can deduct a loss of

A) $1,000.
B) $5,000.
C) $0.
D) none of the above

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