Joe and Kay form Gull Corporation. Joe transfers cash of $250,000 for 200 shares in Gull Corporation. Kay transfers property with basis of $50,000 and fair market value of $240,000. She agrees to accept 200 shares in Gull Corporation for the property and for providing bookkeeping services to the corporation in its first year of operation. The value of Kay's services is $10,000. With respect to the transfer:

a. Neither Joe nor Kay recognizes gain or income on the exchanges

b. Gull Corporation has a compensations deduction o $10,000

c. Gull capitalizes $10,000 as organizational cost

d. None of the above.

Show calculations and choose the correct answer from the choices above.