As part of a transaction that qualifies for section 351 Charles contributes a building with a
Fair market Value of $200,000 (in which he has a basis of $50,000) to McCrary Corp in
exchange for stock. The building was subject to a liability of $10,000 which McCrary also
assumed. In addition, as part of the transaction, Charles received a piece of equipment
with a fair market value of $40,000 and basis of $30,000.
Required: Assume McCrary immediately sells the building for $80,000 and that the
adjusted basis at the date of sale is the same as when it was contributed. What is the
recognized gain or loss that McCrary must recognize on the sale of the building?