Diego transfers real estate with a basis of $140,000 and a fair market value of $190,000 to a controlled corporation in return for stock in the corporation. However, shortly before the transfer Diego mortgages the real estate and uses the $20,000 to meet personal obligations. Consequently, along with the real estate, the mortgage is transferred to the corporation.

What amount of gain, if any, does Diego

(a) realize

(b) recognize