Jane and Walt Form Orange Corporation

Jane and Walt form Orange Corporation. Jane transfers equipment worth $475,000 (basis of $100,000) and cash of $25,000 to Orange Corporation for 50% of its stock. Walt transfers a building and land worth $525,000 (basis of $200,000) for 50% of Orange's stock and $25,000 cash.

A) Jane recognizes a gain of $375,000; Walt recognizes a gain of $325,000.
B) Jane recognizes a gain of $25,000; Walt recognizes no gain.
C) Neither Jane nor Walt recognizes gain.
D) Jane recognizes no gain; Walt recognizes a gain of $25,000.
E) None of the above.