C and D jointly organized Z. C leases real property to Z for 40 years, receiving $500 in cash and half of Z's in exchange for the other half of Z's stock.

a This is a good Section 351 transaction. Z takes a 500 basis in teh lease amortizable over 40 years.

b This is simply a lease of property b C to Z with C being paid in cash and stock. C's income is $500 plus the fair market value of teh stock.

c Neither of the above

Wich one is the correct answert