Bill contributed business realty ($375,000 FMV and $113,000 adjusted basis) to Zeta Inc. in exchange for Zeta common stock. Immediately after the exchange, Bill owned 53% of Zeta's outstanding stock. Compute gain recognized by Bill and by Zeta on this exchange.
A. Bill $0; Zeta $375,000
B. Bill $0; Zeta $0
C. Bill $262,000; Zeta $0
D. Bill $262,000; Zeta $375,000
Answer: C
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