Liesl exercises incentive stock options (ISOs) for 100 shares of stock at the option price of $100 per share on May 21, 2024, when the fair market value is $120 per share. She holds the stock for only seven months and sells the shares for $140 per share. Determine the recognized gain on the sale and classify it as capital or ordinary.
a. $4,000 ordinary income.
b. $2,000 ordinary income and $2,000 LTCG.
c. $4,000 LTCG.
d. $2,000 ordinary income and $2,000 STCG.