Rob and Fran Form Bluebird Corporation with the Following Investments

Multiple Choice

Rob and Fran form Bluebird Corporation with the following investments. $$\begin{array} { l r r } &&\text { Fair Market }\\& \text { Adjusted Basis } & \text { Value } \\\text { From Rob-Cash } & \$ 400,000 & \$ 400,000 \\\text { From Fran-Land } &500,000 & 440,000\\\end{array}$$ ? 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.