1. Roberto, a cash basis taxpayer, incorporates his sole proprietorship. He transfers the following items to newly created Orange Corporation.

	Adjusted Basis	Fair Market Value
Cash	$ 10,000	$ 10,000
Building	120,000	175,000
Mortgage payable (secured by the building and held for 15 years)	135,000	135,000

With respect to this transaction:

	a.	Orange Corporations basis in the building is $120,000.
	b.	Roberto has no recognized gain.
	c.	Roberto has a recognized gain of $5,000.
	d.	Roberto has a recognized gain of $10,000.