Leah transfers equipment (a basis of $400,000 and fair market value of $500,000) for additional stock in Crow Corporation. After the transfer, Leah owns 80% of Crow's stock. Associated with the equipment is Section 1245 depreciation recapture potential of $70,000. As a result of the transfer,

Leah recognizes an ordinary income of $70,000.

The Section 1245 depreciation recapture potential carries over to Crow Corporation.

the Section 1245 depreciation recapture potential disappears.

Leah recognizes an ordinary income of $70,000 and 1231 gain of $30,000.

None of the above