C and D jointly organized Z corporation. C transfers his property to Z in exchange for a $200 five-yera note (which is a debt not equity) and half of Z's stock. D transfers $200 in cash to Z in exchange for the other half of Z's stock.

a 351 covers the transfers. There is no gain or loss to recognize

b C must recognize gain on the property to the extent of amount realized minus basis because 351 does not cover the transaction.

c 351 Covers the transaction; however, 351 (b) requires C to recognize gain on the property to the extent of the boot received which is the $200 note. C may report this gain on teh $200 note on the installment basis under section 453.

d None of the above

Which is the right answer