Alvin transfers $40,000 cash and land to Newcorp, Inc. in exchange for all of its stock. The land has a $280,000 adjusted basis and a fair market value of $500,000 immediately before the exchange. Newcorp assumes a $400,000 mortgage on the land for a valid business purpose.

a) What, if anything, must Alvin recognize on this exchange?

(b) What is Alvins basis in the stock?