Cindy Works for Sky Manufacturers, a Public Corporation

Cindy works for Sky Manufacturers, a public corporation. In 20X1 she was offered an option to purchase shares at $15 per share from her employer. The fair market value on that day was $17 per share. The option had a four year exercise time-limit. Cindy exercised her option in 20X3 and purchased 500 shares. The fair market value at that
Time was $21 per share. What is Cindy's tax treatment of this option in the year 20X3?

A) $3,000 taxable benefit and no security option deduction
B) $3,000 taxable benefit and a 50% security option deduction
C) $2,000 taxable benefit and no security option deduction
D) $2,000 taxable benefit and a 50% security option deduction