Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a Type A merger. In exchange, she received stock in Plum with a fair market value of $670,000 plus $670,000 in cash. Simone's tax basis in the Purple stock was $220,000. What amount of gain does Simone recognize in the exchange and what is her basis in the Plum stock she receives? Multiple Choice $1,120,000 gain recognized and a basis in Plum stock of $1,340,000. $120,000 gain recognized and a basis in Plum stock of $670,000. $670,000 gain recognized and a basis in Plum stock of $670,000. $670,000 gain recognized and a basis in Plum stock of $220,000.
Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a Type A merger. In exchange, she received stock in Plum with a fair market value of $670,000 plus $670,000 in cash. Simone's tax basis in the Purple stock was $220,000. What amount of gain does Simone recognize in the exchange and what is her basis in the Plum stock she receives? Multiple Choice $1,120,000 gain recognized and a basis in Plum stock of $1,340,000. $120,000 gain recognized and a basis in Plum stock of $670,000. $670,000 gain recognized and a basis in Plum stock of $670,000. $670,000 gain recognized and a basis in Plum stock of $220,000.
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 43P
Related questions
Question
Transcribed Image Text:Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a Type A merger. In exchange, she received stock in Plum with a
fair market value of $670,000 plus $670,000 in cash. Simone's tax basis in the Purple stock was $220,000. What amount of gain does Simone recognize
in the exchange and what is her basis in the Plum stock she receives?
Multiple Choice
$1,120,000 gain recognized and a basis in Plum stock of $1,340,000.
$120,000 gain recognized and a basis in Plum stock of $670,000.
$670,000 gain recognized and a basis in Plum stock of $670,000.
$670,000 gain recognized and a basis in Plum stock of $220,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you