Determine the effects of 351 for the following taxpayers.

Grady exchanges qualified property, basis of $15,000 and fair market value of $12,500, for 60% of the stock of Eadie Corporation. The other 40% of the stock is owned by Pedro, who acquired it five years ago.

Because this transactiondoes not meetthe control of the corporation requirement, Grady has income of $____and $_____basis in his shares of stock.