Yenhung, Who Is Single, Forms a Corporation Using a Tax-Free $\begin{array}{|l|l|}\hline \text { Ordinary loss } & \text { Capital loss } \\\hline 0 & \$ 20,000 \\\hline\end{array}$

Yenhung, who is single, forms a corporation using a tax-free asset transfer, which qualifies under Sec. 351. She contributes property having an adjusted basis of $50,000 and an FMV of $40,000. The stock received from the corporation is Sec. 1244 stock. When Yenhung sells the stock for $30,000, her loss is

A) $\begin{array}{|l|l|}\hline \text { Ordinary loss } & \text { Capital loss } \\\hline 0 & \$ 20,000 \\\hline\end{array}$
B) $\begin{array}{|l|l| }\hline \text { Ordinary loss } & \text { Capital loss } \\\hline \$ 10,000 & \$ 10,000\\\hline \end{array}$
C) $$\begin{array} { |l | l| } \hline \text { Ordinary loss } & \text { Capital loss } \\\hline \$ 20,000 & \$ 0 \\\hline\end{array}$$
D) $$\begin{array} {| l | l |} \hline \text { Ordinary loss } & \text { Capital loss } \\\hline \$ 10,000 & \$ 0 \\\hline\end{array}$$