25. Fatima transfers an asset having an FMV of $200,000 and an adjusted basis of $150,000 to XYZ Corporation in a Sec. 351 transaction. Fatima receives in exchange XYZ common stock having an FMV of $175,000 and Brown Corporation common stock (a capital asset) having an FMV of $25,000 and a basis of $10,000 to XYZ Corporation. XYZ Corporation must recognize (explain your answer)

A) no gain.

B) a $15,000 capital gain.

C) a $25,000 capital gain.

D) a $50,000 capital gain.

29. Identify which of the following statements is true. Explain your answer.

A) The transferee corporation's acquisition or assumption of liabilities in excess of the total adjusted bases of the properties transferred by a transferor results in a gain recognition by the transferor.

B) When a transferor exchanges a mortgaged property under Sec. 351 and the amount of the mortgage is greater than the transferor's basis in the property, the transferor's basis in the stock received will be equal to the basis the transferor had in the mortgaged property.

C) When forming a corporation, the accounts payable of a transferor's business are not liabilities for gain computation purposes if the transferor's business uses the accrual method of accounting.

D) The transferee corporation's holding period for assets acquired in an exchange meeting the Sec. 351 requirements does not include the transferor's holding period for the property.