On May 10, 2012, Rafter Corporation Granted Peter an Option

Multiple Choice

On May 10, 2012, Rafter Corporation granted Peter an option to acquire 500 shares of the company's stock for $10 per share. The fair market price of the stock on the date of grant was $12. The fair market value of the option at the date of grant was $3. Peter exercises the option on July 1, 2014, when the fair market value of the stock is $20. How much income must Peter report at the date of exercise?

A) $-0-
B) $1,200
C) $1,800
D) $3,600
E) $5,400