Explain why B is the correct answer, show works

10) Carmen and Marc form Apple Corporation. Carmen transfers land that is Sec. 1231 property, with an adjusted basis of $18,000 and an FMV of $20,000 in exchange for one-half of the Apple Corporation stock. Marc transfers equipment that originally cost $28,000 on which he has taken $5,000 in depreciation deductions. The equipment has an FMV of $25,000 and he receives one-half of the stock and a $5,000 short-term note. The transaction meets the requirements of Sec. 351. Which statement below is correct? A) Carmen recognizes a $2,000 Sec. 1231 gain and Marc recognizes $5,000 as ordinary income. B) Carmen recognizes no gain and Marc recognizes $2,000 as ordinary income. There is no recognized gain or loss. D) Carmen recognizes a $2,000 Sec. 1231 gain and Marc recognizes a $5,000 Sec. 1231 gain.