Ann Coulter and Bill Maher form AB corporation by making the following contributions to AB:

%Stock Taxpayer Property Adj.Basis FMV

60 Ann Coulter Equipment 10,000 20,000

40 Bill Maher Services 0 20,000

Cash 2,000 2,000

Which of the following is true?

a.Both Ann and Bill will recognize gain on the incorporation

b. Neither Ann or Bill will recognize gain

c. Bill will recognize a gain of $2,000

d. Bill will recognize ordinary income of $20,000