Cheryl Purchased 500 Shares of Qualified Small Business Stock QSB)

Cheryl purchased 500 shares of Qualified Small Business Stock QSB) for $900,000 on March 2, 2011. On November 29, 2016, she sells the stock for $1,000,000. Cheryl also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000. Cheryl has $100,000 of other income. Which of the following statements about the stock sale is/are true? I. The tax paid on Cheryl's two stock sales is $4,200. II. Cheryl can only deduct $3,000 of the $10,000 loss on the sale of the stock.

A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.