A, B, C, D and E, all individuals, form X Corporation to engage in a manufacturing business. X issues 100 shares of common stock. A transfers $25,000 cash for 25 shares; B transfers inventory with a value of $10,000 and a basis of $5,000 for 10 shares; C transfers unimproved land with a value of $20,000 and a basis of $25,000 for 20 shares; D transfers equipment with a basis of $5,000 and a value of $25,000 (prior depreciation taken was $20,000) for 25 shares; and E transfers a $20,000 (face amount and value) installment note for 20 shares. E received the note in exchange for land with a $2,000 basis that he sold last year. The note is payable over a five-year period, beginning in two years, at $4,000 per year plus market rate interest.

(c) Assume all the same facts except that C transfers two parcels of unimproved land (Parcel #1 and Parcel #2), each with a value of $10,000. Cs basis in Parcel #1 is $15,000 and Cs basis in Parcel #2 is $8,000. What result to C and X Corporation?

(d) There was $5,000 of gain inherent in the inventory transferred by B. If X Corporation later sells the inventory for $10,000, and B sells his stock for $10,000, how many times will that $5,000 of gain be taxed? Is there any justification for this result?