Individuals Rhett and Scarlet form Lady Corporation. Rhett transfers land and a building with a $140,000 adjusted basis and a $230,000 FMV in exchange for 50% of the stock of Lady Corporation worth $210,000 and a $20,000 note. Scarlet contributes cash of $230,000 for 50% of the stock of Lady Corporation worth $210,000 and a note of the Lady Corporation valued at $20,000. Rhett's recognized gain on the transfer is
A. $90,000.
B. $0.
C. $70,000.
D. $20,000.
Answer: D
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