Donald and Michelle are divorced in the current year. As part of the divorce settlement, Michelle transfers a plot of land in Long Island, NY to Donald. Michelle’s basis in the property was $20,000 and the market value of the property was $250,000 when transferred. Donald holds the property through the end of the year and in hopes of building a residence on it. How much income do Michelle and Donald recognize in the current year?
a. $0 for Michelle and $20,000 for Donald
b. $230,000 for Michelle and $20,000 for Donald
c. $230,000 for Michelle and $0 for Donald
d. $0 for both Michelle and Donald
e. $0 for Michelle and $250,000 for Donald