J owns all the stock of T. T's only asset is a thoroughbred racing track with an adjusted basis of $1,200,000 and a fair market value of $3,000,000. J's basis in the T stock is $1,000,000. P, a corporate developer of shopping malls wants to acquire the race track for a mall site. P and J agree on a Type C reorganization, with T trading the race track for P stock worth $2,580,000 and $20,000 in cash and then liquidating. P will give T some treasury shares P bought in the market for $2,000,000. Assume this will qualify as a good Type C reorganization to which T and P are "parties to a reorganization."

a.

Upon the transfer of the race track to P for the stock and cash, T will recognize gain of $20,000.

b.

The transaction is good Type C reorganization per the 368(a)(1); the exchange will not violate the continuity of business enterprise rule because P will use the race track in a different business.

c.

T will not recognize any gain under Section 361 because it distributes the boot in liquidation as required.

d.

None of the above.