2. Keyarrow transfers land with adjusted basis of$350,000 (fair market value of $600,000) to a C-Corporation that she was forming in exchange for 100% of the stock. The land had a mortgage on it in the amount of $500,000 which is fully assumed by the corporation. The mortgage proceeds were used to develop the land by building a small convenience store on it.

What are the tax consequences of this transfer and what is Keyarrows basis in the Corporation at the end of the transaction?