Trixler, Inc., sells all of its assets to a single purchaser of the business in exchange for an installment note. Trixler had a basis of $500,000 in the sold assets and the installment note had a $800,000 face value with adequate interest. The installment agreement called for four payments of $200,000 each on the anniversary date of the sale with the first payment to be received one year after that date. Interest is receivable each year on the remaining balance in the contract.

After the sale, Trixler liquidates the corporation, distributes the installment note to its sole shareholder, Lea, in cancellation of his stock, and retains enough cash to pay taxes and other bills. The sole shareholder has $600,000 basis in her stock. Which of the following statements below is true?

Question options:

	a. Trixler has no recognized gain and Lea has a recognized gain of $200,000 on the receipt of the installment note.
	b. Trixler recognizes $300,000 of gain and pays taxes on this gain. Lea has a recognized gain of $200,000 on the receipt of the installment note. Lee has no gain on collecting the installment payments.
	c. Trixler recognizes $300,000 of gain and Lea recognizes a capital gain of $50,000 upon the receipt of each installment payment.