1. During year 1, Sandy purchases 100 shares of the stock of Y Corp. for $10 each, and Sam, her husband, purchases a put option on 100 shares of Y stock, with a strike price of $9.50, for a premium of $50. The value of the stock declines, and Sandy sells her Y stock for $9 a share late in year 1. Sam's option is worth $90 at the end of year 1, and the option cash-settles during year 2 with a payment of $125 to Sam. What are the tax consequences of these transactions?