Ezinne transfers land with an adjusted basis of $50,000 and a FMV of $95,000 to a new business in exchange for a 50% ownership interest. The land is subject to a $60,000 mortgage which the business will assume. The business has no other liabilities outstanding. Indicate the amount of gain recognized by Ezinne due to this exchange if the building is transferred to (1) a corporation and (2) a partnership. Assume Sec. 351 is satisfied in the case of the corporation and Sec. 721 is satisfied in the case of the partnership.
A.
| Corporation | Partnership |
| $0 | $0 |
B.
| Corporation | Partnership |
| $10,000 | $10,000 |
C.
| Corporation | Partnership |
| $0 | $10,000 |
D.
| Corporation | Partnership |
| $10,000 | $0 |
Answer: D
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