An individual, transferred two properties to X Corporation ("X") in a transaction that did qualify as a Section 351 transaction. Property #1 was an ordinary asset and had a fair market value ("FMV") of $100,000 and an adjusted basis of $110,000 while Property #2 was a capital asset and had a FMV of $100,000 and an adjusted basis of $20,000. In addition, I transferred a liability along with the two properties in the exchange. Liability was in the amount of $30,000 and was incurred days before the 351 exchange, and was used to buy Birthday presents for I's family. I received only stock of X in the exchange.

a. What income, gain or loss, if any, does I recognize as a result of the exchange?

b. What is X's basis in Property #2?