Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land with a fair market value of $600,000. Packard's basis in the State stock was $682,500. The land had a basis to State Company of $647,500. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?

Multiple Choice

• $47,500 loss recognized by State and a basis in the land of $647,500 to Packard.

• No loss recognized by State and a basis in the land of $600,000 to Packard.

• $47,500 loss recognized by State and a basis in the land of $600,000 to Packard.

• No loss recognized by State and a basis in the land of $647,500 to Packard.