Ed is considering incorporating his T shirt shop. He is concerned with the potential liability for the shop's obligations in case he encounters financial difficulties in the future. Ed realizes that if he incorporates the shop, he will be liable only for the debts of the business he personally guaranteed. If Ed incorporates, the following assets will be transferred to the corporation:

Tax Basis Fair Mkt Value

Cash $$10,000$ $$10,000$

Furn$/$fixtures $20,00060,000$

Land$/$building $40,000100,000$

Ed will receive all of the stock after the corporation is formed in exchange for the assets. Without the recognition provisions of S$351,$ what would be the taxable gain Ed would recognize? Under S$351,$ however, what gain would Ed recognize? Has Ed's economic status changed?