1. Jon Snow owns 1000 shares of Dragon Corp. stock purchased in January 2016 for $30,000. On January 11, 2018, he receives 300 taxable stock rights valued at $6 with the right to purchase additional shares at $32.
   1. How much income does Jon have? What is the basis in the rights? When does the holding period of the rights begin?
   2. On February 19, 2019, he exercises 150 rights and sells the remaining 150 rights for $8 each. What is the basis of each new share? When does the holding period begin? How much and what kind of gain does he have on the sale of the rights?