This Year T Transferred Property Worth $10,000 (Basis $3,000) to C

This year T transferred property worth $10,000 (basis $3,000) to C Corporation in exchange for a 15-year bond worth $5,000 and all of C's stock worth $5,000.

A) The transfer is nontaxable because the transferor received stock and debt on the exchange.
B) T must recognize gain of $7,000 since § 351 does not apply to the transaction.
C) T must recognize gain of $5,000.
D) None of the above