Which of the following statements best describes the tax consequences that arise from a contribution of capital to a corporation by an existing shareholder?
A. The shareholder recognizes gain and loss on the transfer and the corporation’s basis in the property transferred equals its fair market value.
B. The shareholder does not recognize gain and loss on the transfer and the corporation’s basis in the property transferred equals the shareholder’s basis in the property transferred.
C. The shareholder recognizes gain and loss on the transfer and the corporation’s basis in the property transferred equals the shareholder’s basis in the property transferred.
D. The shareholder does not recognize gain and loss on the transfer and the corporation’s basis in the property transferred equals zero.