Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $527,500. The corporation's basis in the Tea Company stock was $370,000. The land had a basis to Tea Company of $608,000. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives?

Multiple Choice

• $157,500 gain recognized and a basis in the land of $608,000

• $157,500 gain recognized and a basis in the land of $527,500

• No gain recognized and a basis in the land of $608,000

• No gain recognized and a basis in the land of $238,000