Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000, for 50 shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year; in return Mary receives 50 shares of Crow. The value of Mary's services is $120,000. With respect to the transfers:
a. Mary will not recognize gain or income.
b. Earl will recognize a gain of $1,400,000.
c. Crow will have a business deduction of $120,000 for the value of the services Mary will render.
d. Crow Corporation has a basis of $1,480,000 in the property it received from Mary.
e. None of these choices are correct.
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