Jermaine Owns All 200 Shares of Peach Corporation Stock Valued

Jermaine owns all 200 shares of Peach Corporation stock valued at $50,000. Kenya, a new shareholder, receives 200 newly issued shares from Peach Corporation in exchange for inventory with an adjusted basis of $40,000 and an FMV of $50,000. Which of the following statements is correct?

A) The transaction results in $10,000 of ordinary income for Kenya.
B) No gain will be recognized by Kenya.
C) Kenya may defer the recognition of any tax until the stock is sold.
D) The transaction results in $10,000 of capital gain for Kenya.