WLB Corporation is formed on January 1 of the current year when Silver Corporation transfers property (basis of $80,000 and fair market value of $70,000) in exchange for 50% of the WLB Corporation stock and a $5,000 promissory note from WLB Corporation. On the same day, Mitchell transfers property (basis of $70,000 and fair market value of $75,000) in exchange for 50% of WLB Corporation stock and a $10,000 promissory note from WLB Corporation. As a result of these transfers:

Select one:

a.

Mitchell has a recognized gain of $10,000, and Silver Corporation has a recognized gain of $5,000

b.

Mitchell has a realized gain of $5,000 and Silver Corporation has a recognized gain of $5,000.

c.

Silver Corporation's basis in the WLB stock is $85,000

d.

Mitchell's basis in the WLB stock is $65,000

e.

None of these.