Hannah, Shea, and Rachel form Danville Corporation with the following consideration.

	Adjusted	Fair Market
	Basis	Value
From Hannah
Cash	$150,000	$150,000
Inventory	10,000	50,000
From Shea
Land	120,000	210,000
From Rachel
Legal services to incorporate	0	40,000

Danville issues its 500 shares of stock as follows: 250 to Hannah, 200 to Shea, and 50 to Rachel. In addition, Shea gets $50,000 in cash.

a.	Does Hannah, Shea, or Rachel recognize gain (or income)?
b.	What basis does Shea have in the Danville stock?
c.	What basis does Danville Corporation have in the inventory? In the land?
d.	What basis does Rachel have in the Danville stock?