Herman, a single individual, formed a corporation in year 1 by way of a qualifying § 351 tax-free asset transfer, in which he transferred property having an adjusted basis of $250,000 and a fair market value of $220,000 and received § 1244 small business corporation stock in exchange. In year 3 Herman sold all of the stock for $210,000. What is the amount and character of loss that Herman must recognize as a result of selling the stock in year 3?

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Ordinary Loss $ -0- 10,000 40,000 10,000 Capital Loss a. $40,000 30,000 b. C. -0- d. -0-