Bruce receives 20 stock rights in a nontaxable distribution. The stock rights have an FMV of $5,000. The common stock with respect to which the rights are issued has a basis of $4,000 and an FMV of $120,000. Bruce allows the stock rights to lapse.


He can deduct a loss of:


A) $0.


B) $1,000.


C) $5,000.


D) none of the above