Rob and Fran Form Bluebird Corporation with the Following Investments

Multiple Choice

Rob and Fran form Bluebird Corporation with the following investments. $\begin{array}{lll}&&\text { Fair Market }\\&\text { Adjusted Basis }&\text {Value }\\\text { From Rob- } & & \\\text { Cash } & \$ 400,000 & \$ 400,000 \\\text { From Fran- } & & \\\text { Land } & 500,000 & 440,000\end{array}$
? Each receives 50% of Bluebird's stock. In addition, Fran receives cash of $40,000. One result of these transfers is that Fran has a:

A) Recognized loss of $60,000.
B) Recognized loss of $20,000.
C) Basis of $460,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000) .
D) Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000) .
E) None of the above.