Star Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $2 per share and $100,000 cash. kelley, the sole shareholder of Star, surrenders her Star stock (basis $900,000) and receives all of the Jupiter stock transferred to Star plus the $100,000. How does kelly treat this transaction on her tax return?

a. kelley recognizes a $100,000 gain. Her Jupiter stock basis is $900,000.

b. kelley has a realized loss of $200,000. Her Jupiter stock basis is $800,000.

c. kelley recognizes a $100,000 gain. Her Jupiter stock basis is $700,000.

d. kelley realizes a $200,000 loss of which $100,000 is recognized. Her Jupiter stock basis is $1 million.