J owns all the stock of T. T's only assets 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 teh 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 treasure share 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 Although the transaction is good Type C reorganization per the 368(a)(1), the exchange will 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.

Which is the right answer and why?