Simone transferred 100 percent of her stock in Purple Company to Plum corporation in a Type A merger. In exchanage, she received stock in Plum wiht a fair markert value of $500,000 plus $500,000 in cash. Simones tax basis in the Purple sftock was $200,000. What amount of gain does Simone recognize in teh exchange and what is her basis in the Plum stock she receives.

a. $800,000 gain recognized and a basis in Plum stock $500,000

b. $500,000 gain and a basis in Plum stock $500,000

c. $800,000 gain and a basis of Plum stock $1,000,000

d. $500,000 gain and a basis of Plum stock $200,000