In 2000, Dos Paytax purchased a building and land for investment purposes in 2000 for $1 million. In 2020, the building and land has FMV of $300,000. In October 2020, Paystax realized a large gain from the sale on different property and use the $700,000 built-in loss to offset that gain so Paystax sells the building and land to his cousin, Tim for $300,000. In 2022, Tim sell the building and land for $900,000.

Which of the following statements is correct?

a.Although Tim is unable to use a right of offset from the purchase of the building and land from Paystax, he is allowed only to recognize 300,000 of income.

b.Paystax is allowed to report a loss of $700,000. Tim is able to completely offset his gain from the sale of property in 2022 and take additional loss of $100,000

c.Paystax is not allowed to report a loss of $700,000 in 2020 and a right of offset of this amount is not created at the same time