Cashew Corporation gives its voting stock worth $900,000 and a building worth $300,000 with a basis of $375,000 for the assets of Brazil Corporation worth $1,200,000 and basis of $700,000. Brazil distributes the stock in Cashew Corporation to its sole shareholder. Which, if any, of the following statements regarding this transaction is correct?

		Cashew recognizes a loss of $75,000 on the transaction.
		Cashew recognizes a loss of $75,000 on the transaction.
		Brazil recognizes a gain of $300,000 on the transaction.
		Brazil recognizes a gain of $300,000 and Cashew recognizes a loss of $75,000 on the transaction.
		None of the above.