Carmen and Marc form Apple Corporation. Carmen transfers land with an adjusted basis of $18,000 and a FMV of $20,000 in exchange for one-half of the Apple Corporation stock. Marc transfers land with a basis of $23,000 and a FMV of $25,000 and he receives one-half of the stock and a $5,000 short-term note from Apple Corporation. Which statement below is correct?

Select one:

a.

There is no recognized gain or loss.

b.

Carmen recognizes a $5,000 gain and Marc recognizes $5,000 gain.

c.

Carmen recognizes a $2,000 gain and Marc recognizes a $5,000 gain.

d.

Marc's basis in the stock received is $20,000