Four Individuals Form Chickadee Corporation Under § 351

Four individuals form Chickadee Corporation under § 351. Two of these individuals, Jane and Walt, made the following contributions:
Adjusted Fair Market
Basis Value
From Jane-
Cash $360,000 $360,000
Patent -0- 40,000
From Walt-
Equipment (depreciation claimed of $100,000) 240,000 370,000
Both Jane and Walt receive stock in Chickadee Corporation equal to the value of their investments.

A) Jane must recognize income of $40,000; Walt has no income.
B) Neither Jane nor Walt recognize income.
C) Walt must recognize income of $130,000; Jane has no income.
D) Walt must recognize income of $100,000; Jane has no income.
E) None of the above.