A and B jointly organize X. A leases real property to X for 40 years, receiving $500 in cash and half of Xs stock. B transfers $500 in cash to X in exchange for the other half of Xs stock.

A. This is a good Section 351 transaction. X takes a $500 basis in the lease amortizable over 40 years.

B. This is simply a lease of property by A to X with A being paid in cash and stock. As income is $500 plus the fair market value of the stock.

C. Neither of the above.