Rhonda and Marta Form Blue Corporation

Multiple Choice

Rhonda and Marta form Blue Corporation. Rhonda transfers land (basis of $55,000 and fair market value of $180,000) for 50 shares plus $20,000 cash. Marta transfers $160,000 cash for 50 shares in Blue Corporation.

A) Rhonda's basis in the Blue Corporation stock is $55,000.
B) Blue Corporation's basis in the land is $55,000.
C) Blue Corporation's basis in the land is $180,000.
D) Rhonda recognizes a gain on the transfer of $125,000.
E) None of the above.