Under the terms of their divorce agreement, Humphrey transferred Corporation H stock to his former wife, Greta, as a property settlement. At the time of the transfer, the stock had a basis to Humphrey of $40,000 and a fair market value of $55,000. What is the tax consequence of this transaction to Humphrey, and what is Greta's basis in the Corporation H stock?
A. Humphrey has no gain or loss; Greta's basis is $55,000.
B. Humphrey has no gain or loss; Greta's basis is $40,000.
C. Humphrey has a gain of $15,000; Greta's basis is $40,000.
D. Humphrey has a gain of $15,000; Greta's basis is $55,000.
Answer: B
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