1. Barack, Andrew, and Donald form BAD Corporation. Barack transfers a machine used in his business worth $20,000 in return for 20 shares in BAD. Andrew transfers a machine used in his business worth $40,000 in return for 40 shares in BAD. Donald transfers land used in his business (held as an investment for 3 years) worth $2,000 (adjusted basis of $1,500) and agrees to serve as manager of BAD for one year in return for 40 shares in BAD. How much is the fair market value of the services contributed by Donald? a) $40,000 b) $10,000 c) $38,000 d) $20,000 e) $2,000