On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are:

Shareholder's Fair Market Built in Gain Basis Property 1 Property 2 Net built-in loss Valueor (Loss) $535,600 $642,720$107,120 $910,520 $696,280 ($214,240) ($107,120) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 40% shareholder when the property is worth $589,160. a. Compute Martin's basis in Property 1 and in Property 2 as of January 4, 2018 Martin's basis is Property 1 is a carryover V basis of 428,480X