. Ethan transfers $20,000 cash and land to Newcorp, Inc. in exchange for all of its stock. The land has a $140,000 adjusted basis and a fair market value of $250,000 immediately before the exchange. Newcorp assumes a $200,000 mortgage on the land for a valid business purpose.

(a) What, if anything, must Jim recognize on this exchange?

(b) What is Jims basis in the stock?

Note: You should cite authoritative sources to support the discussions including the Code, regulations, any relevant IRS pronouncements and court decisions.