K Corporation Is 100 Percent Owned by Seller, Who Has

K Corporation is 100 percent owned by Seller, who has a basis in her stock of $10,000.K Corporation's sole asset is a waterbed factory worth $100,000 (basis $30,000) .If Buyer purchases all the stock of K Corporation for $100,000, Buyer will own a corporation that holds a waterbed factory with a basis in the factory of $30,000, much less than the cost to Buyer.If Buyer is a corporation, a § 338 election could be made to obtain a step-up in basis to $100,000 for the factory.The result would be

A) A deemed sale of the factory and a tax on a gain of $70,000 ($100,000 - $30,000 basis)
B) A tax on the gain of $90,000 ($100,000 - $10,000 basis)
C) No tax, as basis would be carried over from the subsidiary corporation
D) None of the above