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 P recognizes no gain on the transfer of the treasury stock because of Section 1032.

b P takes a transferred basis from T of $1,200,000 plus $20,000 gain recognized under Section 362.

c P takes a transferred basis from T of $1,200,000 under Section 362.

d A and B

e A and C

Which one is the right answer and why?