Question - Brad owns 2,000 shares of Cane Corporation common stock with an adjusted basis of $20,000. He has owned these shares for 3 years. In 2018, Brad receives a nontaxable stock dividend of 20 shares of Cane preferred stock. Fair market values at the time of the dividend were: $8,000 for the preferred stock; and $72,000 for the common. Six months after the stock dividend, Brad sells all of his preferred shares for $7,000. What is the amount and character of Brad's recognized gain on the sale of the preferred stock?
A. $6,800 LTCG.
B. $5,000 STCG.
C. $6,800 STCG.
D. None of the above.
E. $5,000 LTCG.
Please show all calculations and provide explanations. Thanks.