Tim, a cash-basis taxpayer, incorporates his sole proprietorship. He transfers the following items to newly created Wren Corporation:


Adjusted Basis Fair Market Value
Cash $10,000 $10,000
Building 100,000 160,000
Mortgage payable (secured by the building and held for 5 years) 120,000 120,000

With respect to this transaction, Select one:

a. Wren Corporation's basis in the building is $100,000.
b. Tim has no recognized gain.
c. Tim has a recognized gain of $20,000.
d. Tim has a recognized gain of $10,000.