Arnold and Victoria form Deep Purple Corporation with the following transfers: inventory from Arnold (basis of $360,000 and fair market value of $400,000) and improved real estate from Victoria (basis of $320,000 and fair market value of $375,000). Victoria, an accountant, agrees to contribute her services (worth $25,000) in organizing Deep Purple. The corporations stock is distributed equally to Arnold and Victoria. As a result of these transfers: Select one:

a. Victoria has a recognized gain of $55,000 on the transfer of the real estate.

b. Deep Purple can deduct $25,000 as a business expense.

c. Deep Purple has a basis of $360,000 in the inventory.

d. Deep Purple has a basis of $375,000 in the real estate.