On June 1, 2020, Hattie and Kitty formed Cat Corporation (a new entity).
Kitty contributed manufacturing equipment with a fair market value
of $150,000 and a basis of $100,000 in return for a 50% interest in Cat
Corporation. The equipment was secured by loan for $50,000 - which
was assumed by Cat Corporation. She took out the loan on
May 20, 2020. She purchased the equipment on January 1, 2017.
Hattie contributed a patent for cat toy manufacturing in return for
a 50% interest in Cat Corporation. Hattie purchased the patent on March 1, 2018
for $50,000.

What are the tax consequences to Cat Corporation as a result of this transaction?