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 $345,000. Packard's basis in the State stock was $817,500. The land had a basis to State Company of $592,500. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?

Multiple Choice

$247,500 loss recognized by State and a basis in the land of $345,000 to Packard.

$247,500 loss recognized by State and a basis in the land of $592,500 to Packard.

No loss recognized by State and a basis in the land of $345,000 to Packard.

No loss recognized by State and a basis in the land of $592,500 to Packard.