QUESTION1 Questions 1-15 refer to the following fact pattern: Five individuals, A, B, C, D and E formed X Co. After making the following transfers to X Co. they own 100% of X Co: A $18,000 cash and $2,000 worth of services B Property: FMV $60,000 BASIS $ 60,000 MORTGAGE $20,000 C Property: FMV $32,000 BASIS $10,000 MORTGAGE $12,000 D Property FMV $20,000 BASIS $40,000 E Property FMV $92,000 (capital asset) BASIS $10,000 MORTGAGE $ 2.000 (Depreciation recapture potential of $14,000) In return, they receive the following from X Co A $20,000 Stock B $26,000 Stock + $14,000 Cash C $20,000 Stock D $18,000 Stock $2,000 Cash E $60,000 Stock$30,000 Cash A's reportable income and his basis in the X Co. stock is 1 s2.000 ordinary income and $18,000 basis 02.$2,000 ordinary income and $20,000 basis 3 $20,000 ordinary income and $20,000 basis 4 None of these. QUESTION 2 See Question 1 for the facts. X Co.'s net recognized gain or loss or expense on the distribution to A is O 1-None of these. 2.$20,000 3. $2,000 expense 4 $7,000 gain