Individuals A, B, C, and D form X Corporation and transfer the following items. Individual A transferred accounts receivable that he was entitled to receive from providing services to a customer. The accounts receivable had a basis of $0 and a fair market value of $25. Individual B transferred equipment with a basis of $10 and a fair market value of $25. Individual C transferred a building with a basis of $15, a FMV of $45 and subject to a $20 mortgage. Individual D transferred $25 in cash.

Regarding C's mortgage, C borrowed $12 of the $20 immediately before contributing the building worth $45 (the other $8 having been borrowed years ago for valid business reasons) and invested the newly borrowed $12 in the stock market. What are the tax consequences to C.

	A.	$20 of gain is realized, the $20 is boot under section 351(b), but only $5 is recognized. C's basis is $0, the original basis of $15, reduced by the $20 assumed mortgage, increased by the $5 gain. X Corporation's basis is $20.
	B.	$20 of gain is realized, the $20 is boot under section 351(b), and $20 is recognized under section 357(b). C's basis is $15. X Corporation's basis is $35.
	C.	$20 of gain is realized, the $20 is boot under section 351(b), and $12 is recognized under 357(b), and $8 is not recognized as 357(a) debt. C's basis is $12. X Corporation's basis is $27.
	D.	None of the above