Jason and Fares form Milkha Corporation with the following transfers: inventory from Jason (basis of $360,000 and fair market value of $400,000) and improved real estate from Fares (basis of $320,000 and fair market value of $375,000). Fares, an accountant, agrees to contribute his services (worth $25,000) in organizing Milkha. The corporations stock is distributed equally to Jason and Fares. As result of these transfers:

a. Milkha can deduct $25,000 as a business expense.

b. Fares has a recognized gain of $55,000 on the transfer of the real estate.

c. Milkha has a basis of $360,000 in the inventory.

d. Milkha has a basis of $375,000 in the real estate.

Please explain your answer.

I believe the answer is c but I am unsure on how to respond for reasoning.