Rose and Wayne form a new corporation. Rose contributes cash for 85% of the stock and Wayne contributes services for 15% of the stock. The tax effect is
A. Rose and Wayne are not required to recognize their realized gains.
B. Wayne must report the FMV of the stock received as capital gain.
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C. Rose and Wayne must recognize their realized gains, if any.
D. Wayne must report the FMV of the stock received as ordinary income.