With respect to property transfers to Crow Corporation, what will Crow recognize for Mary's services?

In the context of property transfers to a corporation for services rendered, the correct understanding lies in how the transaction is recognized by both the service provider and the corporation. When Mary provides services to Crow Corporation and is compensated with property rather than cash, the corporation can deduct the fair market value of the services received as a business expense.

The reasoning behind the correct answer is that the value of Mary's services, which is indicated to be $120,000, qualifies as a deductible business expense for Crow Corporation. This deduction is permissible under the tax code because it represents an ordinary and necessary expense incurred in the course of conducting business. Deductions for expenses directly related to services provided allow corporations to reduce their taxable income, making this a financially beneficial transaction for Crow.

Understanding that the basis of property and any potential gain recognition occurs under different circumstances highlights why this answer aligns with tax principles governing service transactions and business deductions. Thus, Mary's services resulting in a business deduction of $120,000 to Crow is correct, illustrating the tax treatment applicable in this scenario.