Rob and Fran form Bluebird Corporation with the following investments.

	Adjusted Basis	Fair Market Value
From Rob—
Cash	$400,000	$400,000
From Fran—
Land	600,000	440,000

Each receives 50% of Bluebird’s stock. In addition, Fran receives cash of $40,000. One result of these transfers is that Fran has a:

a. Recognized loss of $160,000.

b. Basis of $560,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).

c. Basis of $400,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).

d. Basis of $480,000 in the Bluebird stock (assuming Bluebird reduces its basis in the land to $440,000).

e. Basis of $440,000 in the Bluebird stock, because her basis exceeded the fair market value of the land she contributed.