Determine the effects of 351 for the following taxpayers.

Grady exchanges qualified property, basis of $37,400 and fair market value of $31,167, 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 transaction (meets/ does not meet) the control of the corporation requirement, Grady has income of $ ???? and $???? basis in his shares of stock.