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Fred receives an incentive stock option from his employer, WOW Company, to buy 400 shares of WOW stock at $30/share, which was its fair market value (FMV) at the time. The option was granted on March 15. Fred exercised it on December 16 when the market price was $36/share. He finally sold the stock on December 20 of the following year at $48/share. What should Fred report on his tax return?

a. A short-term capital gain of $2,400 and a long-term gain of $4,800
b. Wages of $2,400 and a long-term gain of $4,800
c. Miscellaneous income of $2,400 and a long-term gain of $4,800
d. A long-term gain of $7,200

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