Sebastian exchanges stock he owns in Pecan Corporation for stock in Almond Corporation plus a bond worth $75,000 (principal amount of $70,000). The exchange is pursuant to a tax-free reorganization of both corporations. Sebastian paid $300,000 for the stock in Pecan four years ago. The Almond stock is worth $400,000. Sebastian recognizes gain on the transaction of:

A. $100,000 B. $0 C. $70,000 D. $75,000 E. None of the above.