Larry formed Sleuth Corporation in order to incorporate the detective agency business that he had been operating for several years as a sole proprietorship. Larry transferred to Sleuth Corporation the detective agency's accounts receivable with an adjusted basis to Larry of $0 and a fair market value of $6,000, and the office condominium that Larry owned outright and from which he had operated the detective agency that had an adjusted basis to Larry of $30,000, a fair market value of $62,000, and as to which there was a mortgage payable of $34,000, which was assumed by the corporation. Also transferred to the corporation were accounts payable in the amount of $3,000.
In exchange for the assets transferred, Larry received 100 percent of the stock of the corporation. Which of the following statements regarding the tax consequences of the transaction is accurate?
A. Larry recognized $4,000 of his realized gain.
B. Larry recognized $7,000 of his realized gain.
C. The corporation's basis in the condominium it received from Larry is $30,000.
D. Larry recognized $6,000 of ordinary income upon the assignment of receivables.