For the current year, Michael King reported salary and taxable interest income of $40,000. His capital asset transactions during the year were as follows: Long-term capital gains (15% basket) $2,000 Long-term capital losses (28% basket) (8,000) Short-term capital gains 1,000 For the current year, King should report adjusted gross income of A. $35,000 B. $37,000 C. $38,500 D. $39,000