Choose the response that best describes the amount and type of income recognized when the sale of stock acquired through an employee stock purchase plan (ESPP) does not meet the holding period requirement.

A short-term capital gain equal to the difference between the option price and the fair market value of the stock on the exercise date.

Ordinary income equal to the amount by which the fair market value at the time of exercise exceeded the option price.

A short-term capital gain equal to the difference between the option price and the sale price of the stock.

Ordinary income equal to the difference between the option price and the sale price of the stock.