Betty White transfers property (basis of $180,000 and fair market value of $500,000) to Aardvark Corporation for 80% of its stock (worth $425,000) and a long-term note (worth $75,000) executed by Aardvark Corporation and made payable to Betty. As a result of the transfer:

a.

Betty recognizes no gain.

b.

Betty recognizes a gain of $75,000.

c.

Betty recognizes a gain of $270,000.

d.

Betty recognizes a gain of $320,000.