3. Alex exchanges property (landscape artwork by famous artists showing scenes from Chateau Country, having a basis of $50,000; subject to debt of $40,000 on it; and with a fair market value of $800,000), for 80% of the stock of Shortwood Corporation (Short). Shortwood also assumes the $40,000 debt. The other 20% of the stock is owned by Luke, who acquired it several years ago. What are the tax consequences to Alex?

1. What is his amount realized from this deal? ____________________

2. Does he recognize taxable gain on the transfer? If so, how much? ___________________

3. What is his basis in the Short stock? _______________________