Leonard Transfers Equipment (Basis of $40,000 and Fair Market Value

Leonard transfers equipment (basis of $40,000 and fair market value of $100,000) for additional stock in Green Corporation. After the transfer, Leonard owns 90% of the stock. Leonard had claimed depreciation of $50,000 on the equipment prior to transferring it to Green Corporation. With respect to the transfer:

A) Leonard has ordinary income of $50,000.
B) Leonard has ordinary income of $50,000 and a § 1231 gain of $10,000.
C) Green Corporation has ordinary income of $50,000.
D) Green Corporation has a basis of $40,000 in the equipment and it will have no depreciation recapture if it later disposes of the equipment in a taxable transaction.
E) None of the above.