Melon Corporation Gives Its Voting Stock Worth $600,000 and a Building

Melon Corporation gives its voting stock worth $600,000 and a building worth $200,000 with a basis of $150,000 for the assets of Violet Corporation worth $800,000 and basis of $525,000.Violet distributes the stock in Melon Corporation to its sole shareholder.Which, if any, of the following statements regarding this transaction is correct?

A) Violet recognizes a gain of $200,000 on the transaction.
B) Violet recognizes a gain of $200,000 and Melon recognizes a gain of $50,000 on the transaction.
C) Melon recognizes a gain of $50,000 on the transaction.
D) Neither Melon nor Violet recognizes gain on the transaction.
E) None of the above.