Alex exchanges property (landscape artwork by famous artists showing scenes from Chateau Country, having a basis of $50,000; subject to debt of $40,000 on it; and with a fair market value of $800,000), for 80% of the stock of Shortwood Corporation (“Short”). Shortwood also assumes the $40,000 debt. The other 20% of the stock is owned by Luke, who acquired it several years ago. 

What are the tax consequences to Alex?

What is his “amount realized” from this deal?

Does he recognize taxable gain on the transfer? If so, how much?

What is his basis in the “Short” stock?