Cindy Works for Sky Manufacturers Ltd

Cindy works for Sky Manufacturers Ltd.,which is 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 on her 20x3 tax return?

A) $1,000 taxable benefit and no security option deduction
B) $1,000 taxable benefit and a 50% security option deduction
C) $3,000 taxable benefit and no security option deduction
D) $3,000 taxable benefit and a 50% security option deduction