Mitchell purchased 40 shares of Seal Inc. stock five years ago for $100,000. This year, Seal redeemed 10 of Mitchell's shares in a redemption qualifying for exchange treatment under Section 302(b). Mitchell's $25,000 basis in the redeemed stock:

a) Increases his basis in the 30 shares of Seal stock still owned.

b) Produces neither a basis off set or a basis increase, but is forfeited for tax purposes.

c) Produces an ordinary loss deduction.

d) Off sets the redemption proceeds, producing less gain or more loss associated with the redemption.