Five individuals, A, B, C, D, and E, formed X Co. After making the following transfers to X Co., they own 100% of X Co:

A	$70,000 cash and $10,000 worth of services
B	Property:	FMV $70,000	BASIS $35,000	MORTGAGE $40,000
C	Property:	FMV $9,000	BASIS $39,000	MORTGAGE $1,000
D	Property:	FMV $60,000	BASIS $60,000	MORTGAGE $10,000
E	Property:	FMV $45,000 (capital asset)	BASIS $20,000	MORTGAGE $10,000 (Depreciation recapture potential of $2,000)

In return, they receive the following from X Co:

A	$80,000 Stock
B	$15,000 Stock + $15,000 Cash
C	$4,000 Stock + $4,000 Cash
D	$47,000 Stock + $3,000 Cash
E	$28,000 Stock + $7,000 Cash

1). A's reportable income and his basis in the X Co. stock is

$80,000 ordinary income and $80,000 basis

$10,000 ordinary income and $80,000 basis

None of these.

$10,000 ordinary income and $70,000 basis

2). X Co.'s net recognized gain or loss or expense on the distribution to A is

$80,000 expense

None of these.

$70,000 gain and $10,000 expense

$10,000 expense

3). B's recognized gain or loss is

$20,000 gain

0

None of these.

$15,000 gain