Candace owns 100% of the stock of Tulip Corporation. In the current year Candace transfers an installment obligation, tax basis of $30,000 and fair market value of $70,000, for additional stock in Tulip worth $70,000.

a. Candace recognizes no taxable gain on the transfer.

b. Candace has a taxable gain of $40,000.

c. Candace has a taxable gain of $70,000.

d. Candace has a basis of $70,000 in the additional stock she received in Tulip Corporation.

e. None of the above.