1. Black Corporation (E & P of $1,350,000) distributes land (basis of $423,000, fair market value of $697,000) to Bailey Monroe, a shareholder, to carry out a qualifying stock redemption. Bailey Monroe had a basis of $96,300 in the shares redeemed. Which of the following is anincorrectstatement regarding the redemption?

a. If the land is distributed subject to a $740,000 liability, Black Corporation will recognize a gain of $317,000.

b. If the land is distributed subject to a $510,000 liability, Bailey Monroe will recognize a gain of $90,700.

c. If the land is distributed subject to a $510,000 liability, Bailey Monroe will have a basis in the land of $697,000.

d. None of these

e. If the land is distributed subject to a $510,000 liability, Black Corporation will recognize a gain of $274,000.