Pursuant to a Type C reorganization, Alice exchanged 1,000 shares in Blades, Inc., with a basis of $11,000 and a fair market value of $9,000 for stock in Razors, Inc. worth $8,500 and cash of $1,000. Blades earnings and profits were substantial. Alice recognizes

a. dividend income of $1,000.

b. long-term capital loss of $1,500.

c. long-term capital gain of $1,000.

d. no gain or loss.