Ted Forms the Nutshell Corporation During the 2011 Tax Year

Ted forms the Nutshell Corporation during the 2011 tax year.To form the corporation,Ted transfers assets having a fair market value of $550,000 to Nutshell Corporation for 100 percent of the corporation's stock.Ted's adjusted basis in the assets transferred was $250,000 and Nutshell Corporation assumed a $175,000 mortgage on the assets.If the fair market value of the stock received by Ted is $375,000,what is his basis in the stock received from the corporation?

A) $550,000
B) $375,000
C) $425,000
D) $250,000
E) $75,000