Steve owns Barb, Inc. and has grown the business over the last 15 years and is the sole owner. He decides to sell 40 percent of the corporate stock (all outstanding stock) on July 1, Year 1 to an ESOP for $8 million. His adjusted basis for his entire interest in the stock was $3 million. On February 4th, Year 2, Steve uses all $8 million to buy shares of Apple Stock. Which of the following statements is correct?

a. He will have a capital gain of $5.0 million in Year 1 for tax purposes.

b. He will have a capital gain of $6.8 million in Year 1 for tax purposes.

c. Steve will not have a capital gain in Year 1 for tax purposes.

d. Steves transaction does not qualify for non-recognition of gain treatment.