Raul owns 1,000 shares of stock in Mountain Corporation, worth $50 per share. The 2,000 shares were purchased in 2004 for $10 per share. In 2013, the corporation issues a 10% stock dividend to all common shareholders with an option of receiving either the stock worth $10,000 or $12,000 cash. Raul selects the stock. Raul's gross income from the above is:

raul can elect to recognize income of 12,000 or reduce he basis in the stock by 10,000

0

12,000

10,000

none of the above