Eva contributes land (capital asset) with a fair market value of $400,000 and a tax basis of $600,000 for 300 shares of EJ Corp. and a note for $100,000 Josie contributes a warehouse with a fair market value of $800,000 and a tax basis of $200,000. The warehouse is subject to a mortgage of $500,000 which is assumed by EJ Corp. Josie receives 300 shares of EJ Corp.
What tax basis does EJ Corp have in the land and warehouse?
A. Land $600,000 and warehouse $ 500,000
B. Land $400,000 and warehouse $500,000
C. Land $400,000 and warehouse $200,000
D. Land $600,000 and warehouse $200,000