Packard Corporation Transferred Its 100 Percent Interest to State Company

Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land with a fair market value of $427,500. Packard's basis in the State stock was $625,000. The land had a basis to State Company of $535,000. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?

A) $107,500 loss recognized by State and a basis in the land of $427,500 to Packard.
B) $107,500 loss recognized by State and a basis in the land of $535,000 to Packard.
C) No loss recognized by State and a basis in the land of $427,500 to Packard.
D) No loss recognized by State and a basis in the land of $535,000 to Packard.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
91) Keegan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases.
The fair market value of the corporation's stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Keegan.
What amount of gain or loss does Keegan realize on the transfer of the property to his corporation?