C transfers $1000 in uncollected customer accounts receivable fro his cash basis service business to Z in exchange for half of Z's common stock plus Z's assumption of $500 of accounts payable attributable to the service business. C could have deducted the $500 upon payment in cash. D transfers $500 in cash to Z in exchange for the other half of Z's stock.

a. The transaction is not covered by Section 351 because the customer accounts receivable are not property

b. The transaction is covered by Section 351. There is no gain or loss to recognize. C's stock basis is zero and Z's property basis is zero.

c. Section 351 applies. However, the $500 of accounts payable are liabilities in excess of basis so that gain must be recognized to that extent.

d. None of the above