Answer:
b) $11,000 gain realized; $10,000 recognized.
Step-by-step explanation:
Gain realized = $16,000 + $10,000 + $5,000 - $20,000 = $11,000
However, the transaction qualifies under sec.351 for non recognition. Transfer of Mortgaged property to a controlled corporation does not require recognition of gain unless the liabilities transferred or assumed are greater than the basis of all the property transferred. So the recognized gain is attributable to the $10,000 cash received.