Z is a corporation owned entirely by two individuals, C and D. C owns 60 shares of Z, D owns shares of Z. D ahs an option to buy 21 shares from Z.

a D is considered as owning 61 shares of Z for purposes of 318 and 302 calculatin regarding D

b D is not considered by the IRS as owning 21 shares of Z for purposes of 302 and 318 calculations for C

c A and B

d None of the above

Which is the correct answer and why?