1. Garrett decides to incorporate his sole proprietorship. He transfers a building (used in his business) in exchange for 100% of the stock. Shortly before the transfer, Garrett mortgaged the real estate for $100,000 and used $10,000 of the loan proceeds to remodel his personal residence. He used the remaining $90,000 to purchase inventory for the new corporation (i.e., a legitimate business reason). The corporation assumes the $100,000 debt. How much of the loan proceeds will be considered boot for purposes of calculating gain under Section 351.

   		a. zero.
   		b. $90,000.
   		c. $100,000.
   		d. $10,000.

2. Ben transfers land (FMV = 200,000; basis = 90,000; mortgage on land = 150,000) to the SYZ, Inc., his 80% owned corporation in exchange for stock worth $60,000. Assume the transfer qualifies under Section 351. How much of the gain realized, if any, must Ben recognize on the transfer to SYZ, Inc.?

   		a. $110,000.
   		b. $90,000.
   		c. $60,000.
   		d. $150,000.
   		e. None of the above.