Assumptions: A owns all of the stock of T, the only asset of which is acreage that had been used as one of the last surviving drive-in theatres, with an adjusted basis of $60,000 and a fair market value of $150,000. A’s basis in the T stock is $50,000. Y, a publicly held grocery chain, wants to acquire the property for a store site. Y is willing to give either its voting common stock worth $150,000 in exchange for the property in a taxable transaction or its stock worth $130,000 in exchange for the property or for the stock of T in a transaction that will be tax-free to A and T.

(1)    Can A avoid gain recognition by a like kind exchange of T stock for Y stock under §1031? Under any other section? If Y offers to exchange one of its publicly traded bonds for the T stock, should A accept the offer? Why is Y willing to give only $130,000 worth of stock in a tax-free exchange?