Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation€™s stock. The property transferred to the corporation had the following fair market values and tax bases:

The corporation also assumed a mortgage of $200,000 attached to the building and land. The fair market value of the corporation€™s stock received in the exchange was $220,000. The exchange met the requirements to be tax-deferred under §351.
a. What amount of gain or loss does Zhang recognize on the transfer of the property to her corporation?

b. What is Zhang€™s tax basis in the stock she receives in the exchange? 

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Tax Basis FMV $ 20,000 $ 10,000 Inventory Building 150,000 100,000 Land 230,000 70,000 Total $400,000 $180,000