Mirasol Corporation Granted an Incentive Stock Option to Employee Josephine

Multiple Choice

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago.The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date.The option allowed Josephine to purchase 160 shares of Mirasol stock.Josephine exercised the option this year when the stock's FMV was $250.Unless otherwise stated,assume Josephine is a qualifying employee.The results of the above transactions to Mirasol Corporation will be

A) no compensation deduction.
B) a compensation deduction of $16,000 on the grant date.
C) a tax preference item of $16,000 on the exercise date.
D) a compensation deduction of $16,000 on the exercise date.