Albert transfers land (basis of $140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock and a note payable in the amount of $80,000. Gold assumes Albert's mortgage on the land of $200,000. As a result of the transfer,

1. Albert has a recognized gain on the transfer of $140,000.

2. Albert has a recognized gain on the transfer of $80,000.

3. Albert has a recognized gain on the transfer of $60,000.

4. Gold Corporation has a basis in the land of $220,000.

5. None of the above

Option D is wrong because Gold corporation has a basis in the land of Albert's recognized gain plus the cost of the value of land's Albert. Therefore, $140,000 + $140,000 = $280,000.

Option A is correct because, under the recognized gain clause 357(C), the mortgage on the land exceeds the cost of value of the land by $(200,000 - $140,000) = $60,000. Moreover, Alberta has received $80,000 additional from notes payable. So, total recognized gain on the transfer = $80,000 + $60,000 = $140,000.