Martin operates a law practice as a sole proprietorship using the cash method of accounting. Martin incorporates the law practice and transfers the following items to a new, solely owned corporation.

	Adjusted Basis	FMV
Cash Equipment Accounts receivable Accounts payable (deductible expenses) Note payable (on equipment)	$10,000 80,000 0 0 50,000	$ 10,000 100,000 120,000 60,000 50,000

A. $20,000; $30,000

B. $0; $30,000

C. $20,000; $40,000

D. $0; $40,000