Damien is an employee of Camden Inc., a CCPC. In Year 1, when the fair market value (FMV) of Camdens shares was $6.00 per share, Damien was granted an option to acquire 2,000 shares at an exercise price of $7.00 per share. On December of Year 1, when the FMV of Camden shares was $8.50 per share, he exercised his option to acquire 2,000 shares. In April of Year 2, he was granted an option to acquire another 1,000 Camden shares at an exercise price of $8.00 per share when the FMV of the shares was $9.50 per share. Damien exercised his option to acquire 1,000 Camden shares in November of Year 2 when the FMV was $10.00 per share. In January of Year 3, Damien sold 2,500 of the shares acquired under the stock option plan for $11.00 per share. The stock option benefit required to be included in Damiens income for Year 3 has been correctly determined as $4,000. In addition to the $4,000 stock option benefit, which of the following statements regarding Damiens taxable income for Year 3 is true?

A. Damien will include a taxable capital gain of $2,500 and will deduct $2,000 under Division C.

B. Damien will include a taxable capital gain of $2,750 and will deduct $2,000 under Division C.

C. Damien will include a taxable capital gain of $2,750 and will deduct $1,500 under Division C.

D. Damien will include a taxable capital gain of $2,500 and will deduct $1,500 under Division C.