James and Lucretia form Garfield Corporation. James transfer…
James and Lucretia form Garfield Corporation. James transfers land ($225,000FMV, $180,000A/B) in exchange for 50% of the Garfield Corporation stock. Lucretia transfers equipment that originally cost $300,000 on which she has taken $130,000 in depreciation. The equipment has a FMV of $345,000. Lucretia receives 50% of the stock of Garfield Corporation and a $120,000 note receivable. The transaction qualifies for deferral under §351. Which statement below is correct?