T Corp (T) has a property with a fair market value of $100 and basis of $50. T is wholly owned by Abby (basis in stock: $20). On January 3 of year 1, P Corp (P) and T signed a binding contract pursuant to which T will be merged with and into P on June 1 of year 1 under the applicable state corporate laws. Pursuant to the contract, the T shareholder will receive 40 P shares of common voting stock and $60 of cash in exchange for all of the outstanding stock of T. On January 2 of year 1, the value of the P stock is $1 per share. On June 1 of year 1, T merges with and into P pursuant to the terms of the contract. On that date, the value of the P stock is $.25 per share. After the merger, P Corp retained T Corps assets for P Corps business.

(a) Whats the tax treatment to T?

(b) Whats the tax treatment to Abby?

(c) Whats the tax treatment to P?