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 statements regarding the tax consequences of the transaction is accurate?