Anna, Brian, and Candice decide to form Zeta Corporation. For each transfer compute the transferors realized and recognized gain or loss; the transferors adjusted basis in his/her Zeta stock and Zeta Corporations adjusted basis in the assets received from the shareholders. Zeta has agreed to assume all the debt on the assets transferred to it.

a. Anna transfers machinery with a basis of $40,000 and a FMV of $65,000 for Zeta stock worth $65,000.

b. Brian transfers land with a basis of $40,000 and subject to two mortgages. The first mortgage is a purchase-money mortgage in the amount of $30,000. The second mortgage of $20,000 was placed on the property two weeks prior to the transfer and the proceeds will be used by Brian for a down payment on a home. Zeta Corporation issues him stock with a FMV of $65,000 and assumes the debt.

c. Candice transfers some office equipment with an adjusted basis of $3,000 and subject to a secured debt of $5,000 for Zeta stock with a FMV of $13,000. The debt was incurred to finance the acquisition of the equipment. The corporation assumed the debt.