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 $435,000. Packard's basis in the State stock was $610,000. The land had a basis to State Company of $532,500. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?

Multiple Choice

$97,500 loss recognized by State and a basis in the land of $435,000 to Packard.

$97,500 loss recognized by State and a basis in the land of $532,500 to Packard.

No loss recognized by State and a basis in the land of $435,000 to Packard.

No loss recognized by State and a basis in the land of $532,500 to Packard.