Ralph and Peter form Sparrow, a C Corporation, with the following investments.

Ralph transfers machinery $($basis of $$140,000$ and fair market value of $$200,000),$ while Peter transfers land $($basis of $$120,000$ and fair market value of $$190,000)$ and services rendered $($worth $$10,000)$ in organizing the corporation. Each shareholder is issued $25$ shares in Sparrow Corporation representing $50\%$ ownership for each of them. With respect to the transfers:

Peter has a basis of $$120,000$ in the $25$ shares he acquires in Sparrow Corporation.

Sparrow Corporation has a basis of $$130,000$ in the land transferred by Peter.

Neither Ralph nor Peter has recognized gain or income on the transfers.

Ralph has no recognized gain; Peter recognizes income of $$10,000.$