Shareholder A contributes property with a basis of $20,000 and FMV of $50,000 to a C Corporation in exchange for 40% of the stock. Shareholder B contributes services worth $75,000 for 60% of the stock. What is Shareholder A's recognized gain?

For a tax-free exchange under IRC §351, transferors of *property* must own at least 80% of the stock immediately after. Shareholder B contributed *services*, so B's stock is not counted toward the 80% test. Shareholder A (property) only owns 40%. Therefore, §351 does not apply. A recognizes gain of FMV ($50k) - Basis ($20k) = $30,000.