Katie owns 300 shares of BudaBuda Corporation common stock which was purchased on March 20, 1999, for $30,000. On November 8 of the current year, she receives a distribution of 300 stock rights. Each stock right has a $10 FMV and the FMV of the Buda common stock is $50 per share. With each stock right, she may acquire one share of Buda common stock for $135. a. How much gross income must Katie recognize? b. What is the basis of each stock right received? c. If she sells the 300 stock rights for $8,300, what is her gain? d. If she exercises the 300 stock rights on December 88, what is the basis of the 300 shares she receives and when does the holding period for those shares start?