Question - Bob created MNO Inc. several years ago and has owned all 10 outstanding shares of MNO Inc. since the creation of MNO Inc. The fair market value of those shares is now $50,000. Bob's friend, Lee, owns a building having a fair market value of $450,000 and an adjusted basis to Lee of $100,000. The building is encumbered by a $130,000 mortgage. Earlier this month, Bob and Lee discussed Lee's becoming involved in the business of MNO Inc., and as a result of these discussions, Lee transferred the building to MNO Inc. and in exchange for the building, MNO Inc. transferred to Lee 90 shares of authorized but not previously issued stock of MNO Inc. How much gain does Lee realize and recognize as a result of these transfers?
a. Realized gain of 0 and recognized gain of 0.
b. Realized gain or $350,000, none of which is recognized.
c. Realized gain of $350,000 and recognized gain of $340,000.
d. Realized gain of $350,000 and recognized gain of $30,000 of gain.