ALL PARTS.

Please explain C and D. Thank you

2. B organized Y Corporation and transferred a building with a basis of $100,000 and a fair market value of $400,000. The building was subject to a first mortgage of $80,000 which was incurred two years ago for valid business reasons. Two weeks before the incorporation of Y, B borrowed $10,000 for personal purposes and secured the loan with a second mortgage on the building. In exchange for the building, Y Corporation will issue $310,000 of Y common stock to B and will take the building subject to the mortgages. (a) What are the tax consequences to B on the transfer of the building to Y Corporation? (b) What result if B did not borrow the additional $10,000 and, instead, Y Corporation borrowed $10,000 from a bank and 99 gave B $310,000 of Y common stock, $10,000 cash and will take the building subject to the $80,000 first mortgage ? (c) Is the difference in results between (a) and (b), above, justified? (d) When might there be legitimate business reasons for a corporation assuming a transferor's debt or taking property subject to debt? 2. B organized Y Corporation and transferred a building with a basis of $100,000 and a fair market value of $400,000. The building was subject to a first mortgage of $80,000 which was incurred two years ago for valid business reasons. Two weeks before the incorporation of Y, B borrowed $10,000 for personal purposes and secured the loan with a second mortgage on the building. In exchange for the building, Y Corporation will issue $310,000 of Y common stock to B and will take the building subject to the mortgages. (a) What are the tax consequences to B on the transfer of the building to Y Corporation? (b) What result if B did not borrow the additional $10,000 and, instead, Y Corporation borrowed $10,000 from a bank and 99 gave B $310,000 of Y common stock, $10,000 cash and will take the building subject to the $80,000 first mortgage ? (c) Is the difference in results between (a) and (b), above, justified? (d) When might there be legitimate business reasons for a corporation assuming a transferor's debt or taking property subject to debt