A shareholder is issued two warrants in a transaction qualifying as a nontaxable stock dividend. The shareholder owns 10 shares with a basis of $4 each and the dividend is made when each has a value of $10. Each warrant allows the holder to purchase one share for $5. No separate elections are made by the shareholder. Immediately after the dividend, what is the shareholders basis in each warrant A. Zero B. $3 C. $5 D. $8 E. $10