1. This year, CSUEB Inc. granted a nonqualified stock option to Luca Muoz to buy 10,000 shares of CSUEB stock for $10 per share for five years. At date of grant, CSUEB stock was selling on a regional securities market for $8 per share. CSUEB recorded $25,000 compensation expense for the estimated value of the option. Five years after CSUEB granted the option to Luca Muoz, she exercised it on a day when CSUEB stock was selling for $12.00 per share. What is CSUEBs tax deduction in the year of exercise?

   	A.	$0
   	B.	$5,000
   	C.	$20,000
   	D.	$95,000
   	E.	$120,000