Kirk and Madison form May Corporation. Kirk transfers property (basis of $20,000 and value of $300,000) for 100 shares in May Corporation. Madison transfers property (basis of $40,000 and value of $280,000) and provides legal services in organizing the corporation. The value of her services is $20,000. In return, Madison receives 100 shares in May Corporation. With respect to the transfers, _____.
a) Kirk will recognize gain
b) Madison will not recognize any gain or income
c) May Corporation will have a basis of $280,000 in the property it acquired from Madison
d) May will have a business deduction of $20,000
e) None of the above