Choice "a" is correct. Lind computes his basis as the basis of property and cash (none here) contributed, less the amount of any debt he is relieved of. Here he contributes property with an adjusted basis of $40,000, but the $10,000 debt he is relieved of must be subtracted, resulting in a net basis of $30,000. This can also be thought of as giving Lind a basis equivalent to the amount of equity he had in the contributed building.

Choice "c" is incorrect. The basis of Lind's stock is based on his basis in the contributed property, not its fair market value.

Choice "b" is incorrect. Lind must subtract the $10,000 of debt he is relieved of from his $40,000 basis in the property to arrive at his basis in the stock.

Choice "d" is incorrect. Because Lind contributed property with a basis above zero, his basis in the stock is greater than zero.