Bat Corporation Distributes Stock Rights with a $20,000 FMV to Its

Bat Corporation distributes stock rights with a $20,000 FMV to its common stock shareholders. The $20,000 value of the stock rights at the time of distribution is less than 15% of the value of the underlying stock. Which of the following statements is true?

A) The holding period for the rights begins on the day the rights are distributed in all cases.
B) A shareholder cannot allocate any basis to the rights.
C) A shareholder must allocate basis to the rights based on the relative FMVs of the stock and the rights.
D) The basis in the rights is zero unless a shareholder makes a valid election to allocate basis to the rights.