Mark Davis was offered participation in a nonqualified stock option plan. If he were to choose this form of additional compensation over an incentive stock option plan, which one of the following statements would apply to him?

He would have an alternative minimum tax preference item for the bargain element of the option.

If the plan discriminates in favor of highly compensated employees, Mark would be taxed at the time the option is granted.

Mark must recognize ordinary income no later than the date the option is exercised.

If the plan does not discriminate in favor of highly compensated employees, Mark can defer income until the sale of the underlying stock.