Lynn transfers land having a $50,000 adjusted basis, an $80,000 FMV, and $10,000 cash to Allied Corporation in exchange for 100% of Allied's stock. The corporation assumes the $70,000 mortgage on the land. Which of the following statements is correct?
A. Lynn recognizes no gain and the stock basis is $50,000.
B. Lynn recognizes no gain and the stock basis is $60,000.
C. Lynn recognizes a $10,000 gain and the stock basis is zero.
D. Lynn recognizes a $10,000 gain and the stock basis is $60,000.
Answer: C
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