Chapter 19 Corporate Organization Exercise Kathy and Carl formed a corporation by each contributing an asset with a FMV of $50,000 for half of the stock in the corporation. Prior to the transfer, Kathy had an adjusted basis of $40,000 in her asset and Carl had an adjusted basis of $60,000 in his asset. a. Does this exchange qualify for 351 treatment? Why? (Y/N) b. What is Kathy's realized gain on the transaction? c. What is Kathy's recognized gain on the transaction? d. What is Kathy's basis in her stock? e. What is the corporation's basis in Kathy's asset? f. What would Kathy's recognized gain/loss be if she skld her stock for $50,000 ? (gain/loss) B. What would the corporation's recognized gain/loss be if it sold her asset for $50,000