Assume that the parent corporation paid $1,000,000 to purchase all of the shares of the subsidiary corporation. The subsidiary corporation has assets with a fair value of the $400,000 and a tax basis of $300,000; it has no liabilities. If they make the election under Section 338, which of the following is true?

		Parent would recognize a $600,000 gain.
		Subsidiary would recognize a $100,000 gain.
		Neither parent nor subsidiary would recognize a gain.
		Parent would not be allowed to recognize any goodwill.