Roan decides to incopirate his medical practice. He uses the cash method of accounting. On the date of incorporation, the pracfice reports the following balance sheet:

All the cursnt liabilities would be deductible by Roan if he paid them. Roan transfer all the assets and liabilites to a professional corporation in exchange for all of its stock.

What are the amount and character of Roan's recognized gain or loss?

Roan realizes a(n) ------ ------- and recognizes --------

due to ---------