This year, John receives a nontaxable distribution of stock rights from Puzzles Inc,. Each right entitles the holder to purchase one share of stock for $40. One right is issued for every two shares of stock owned. John owns 100 shares of stock purchased three years ago for $5,000. At the date of distribution, the rights are worth $2,000 (50 rights at $40 per right). Puzzles stock is $80 per share. On December 15, he sells 40 stock rights for $50 per right. How much gain does John recognize on the sale? A. $1,200 B. $800 C. $400 D. $0 E. None of the above