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 $532,500. Packard's basis in the State stock was $622,500. The land had a basis to State Company of $585,000. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?

• $52,500 loss recognized by State and a basis in the land of $532,500 to Packard.

• $52,500 loss recognized by State and a basis in the land of $585,000 to Packard.

• No 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 $585,000 to Packard.