Harry, a cash basis taxpayer, incorporates his sole proprietorship. He transfers the following items to newly created Southwest Corporation and receives only stock in Exchange

Adjusted Basis Fair Market

Value

Land 100,000 160,000

Mortgage payable

(secured by the land and held 120,000 120000

for 5years)

Harry corporation will have a basis in the land of

a) 0

b) 100000

c) 120000

d) 160000

e) 40000