Marylou transfers $220,000 of equipment (basis  $170,000) to her wholly owned corporation in exchange for all the authorized nonvoting stock and $20,000 cash.

How much gain or loss does Marylou recognize on the transfer, and what is her basis in the stock?

a. gain  0; basis  $150,000

b. gain  $20,000; basis  $150,000

c. gain  $20,000; basis  $170,000

d. gain  $50,000; basis  $220,000 AppendixLO1