Herman, a single individual, formed a corporation in Year 1 by way of a qualifying Section 351 tax-free asset tran sfer, in which he transferred property having an adjusted basis of $250,000 and a fair market value of $220,000 and received Section 1244 small business corporation stock in exchange. In Year 3 Herman sold all of the stock for $210,000. What is the amount of loss that Herman must recognize as a result of selling the stock in Year 3?

Ordinary Loss Capital Loss

-A. $10,000 $0.00

-B. $40,000 $0.00

-C. $10,000 $30,000

-D. $0.00 $40,000