Sammi Jo decides to incorporate her sole proprietorship. She transfers equipment (used in the business) in exchange for stock. Shortly before the transfer, she took a loan against the equipment in the amount of $20,000. She used $15,000 of the loan proceeds to purchase additional equipment for the business, i.e., legitimate business purpose. She used the remaining $5,000 for a well-deserved personal vacation to Europe. How much of the loan proceeds will be considered boot for purposes of calculating gain under Section 351.

a. zero. b. $20,000. c. $15,000. d. $5,000. e. None of the above.