Kelly, Tanya, and Barry form The Paint Corporation.

Kelly transfers a building (A/B $40,000, FMV $100,000);

Tanya invests $60,000 cash and performs services worth $15,000.

Barry transfers equipment (A/B $50,000, FMV $25,000) and land (A/B $40,000, FMV $50,000).

They each receive 50 shares in The Paint Corporation, and each share is worth $1,500.

Kelly also receives $10,000 cash from the corporation. The corporation assumes a $15,000 debt that Kelly owes on the building.The $15,000 debt is for tax avoidance.

(a) What is Kelly's recognized gain?

(b) What is Kelly's stock basis?

What is the corporation's basis in the building?