Lucas Transfers Investment Land to a Corporation as Part of a Section

Multiple Choice

Lucas transfers investment land to a corporation as part of a Section 351 transaction.The land has a fair market value of $75,000, an adjusted basis of $30,000, and is encumbered by a mortgage (from its original purchase five years ago by Lucas) of $40,000 that the corporation assumes.In exchange for the land, the corporation issues stock to Lucas worth $35,000.How much gain does Lucas recognize, what is Lucas's stock basis, and what is the basis of the land to the corporation, respectively?

A) $0 gain; $30,000 stock basis; $30,000 land basis
B) $10,000 gain; $0 stock basis; $40,000 land basis
C) $10,000 gain; $10,000 stock basis; $30,000 land basis
D) $0 gain; $0 stock basis; $30,000 land basis