Problem 12-30 (Algorithmic) (LO. 2, 3) In January of the current year, Wanda transferred machinery worth $370,000 (adjusted basis of $55,500) to a controlled corporation, Oriole, Inc. The transfer qualified under 351. Wanda had deducted $296,000 of depreciation on the machinery while it was used in her proprietorship. Later during the year, Oriole sells the machinery for $351,500. Answer the following questions regarding the tax consequences to Wanda and to Oriole on the sale of the machinery. a. Does Wanda recognize a gain or loss of any kind on the transfer of the machinery to Oriole? No gain is recognized b. Which taxpayers, if any, will recognize a gain as a result of the subsequent sale of the machinery by Oriole? Only Oriole, Inc. c. What is Oriole's basis in the machinery before the sale? $ d. What is Oriole's gain from the sale? Oriole has a gain of $ Feedback which is treated as ordinary income under 1245 V. Check My Work Section 351 is mandatory if a transaction satisfies the provision's requirements. The three requirements for nonrecognition of gain or loss 351 are that (1) property is transferred (2) in exchange for stock and (3) the property transferors are in control of the corporation after t exchange. The basis of property received by the corporation generally is determined under a carryover basis rule.