Celeste transferred 100 percent of her stock in Supply Chain Company to Marketing Corporation in a Type A merger. In exchange, she received stock in Marketing with a fair market value of $715,000 plus $715,000 in cash. Celeste's tax basis in the Supply Chain stock was $1,580,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives? Multiple Choice a. $150,000 loss recognized and a basis in Marketing stock of $865,000 b. No loss recognized and a basis in Marketing stock of $1,580,000 c. No loss recognized and a basis in Marketing stock of $865,000 d. $150,000 loss recognized and a basis in Marketing stock of $1,580,000
Celeste transferred 100 percent of her stock in Supply Chain Company to Marketing Corporation in a Type A merger. In exchange, she received stock in Marketing with a fair market value of $715,000 plus $715,000 in cash. Celeste's tax basis in the Supply Chain stock was $1,580,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives? Multiple Choice a. $150,000 loss recognized and a basis in Marketing stock of $865,000 b. No loss recognized and a basis in Marketing stock of $1,580,000 c. No loss recognized and a basis in Marketing stock of $865,000 d. $150,000 loss recognized and a basis in Marketing stock of $1,580,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Celeste transferred 100 percent of her stock in Supply Chain Company to Marketing Corporation in a Type A merger. In exchange, she received stock in Marketing with a fair market value of $715,000 plus $715,000 in cash. Celeste's tax basis in the Supply Chain stock was $1,580,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives?
Multiple Choice
a. $150,000 loss recognized and a basis in Marketing stock of $865,000
b. No loss recognized and a basis in Marketing stock of $1,580,000
c. No loss recognized and a basis in Marketing stock of $865,000
d. $150,000 loss recognized and a basis in Marketing stock of $1,580,000
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