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 $607,500 plus $607,500 in cash. Simone's tax basis in the Purple stock was $238,000. what amount of gain does Simone recognize in the exchange and what is her basis in the Plum Stock she
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 $607,500 plus $607,500 in cash. Simone's tax basis in the Purple stock was $238,000. what amount of gain does Simone recognize in the exchange and what is her basis in the Plum Stock she
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $607,500 plus $607,500 in cash. Simone's tax basis in the Purple stock was $238,000. what amount of gain does Simone recognize in the exchange and what is her basis in the Plum Stock she receives?
Multiple Choice
___ $977,000 gain recognized and a basis in Plum stock of $1,215,000.
___ $977,000 gain recognized and a basis in PLum stock of $607,500.
___ $607,500 gain recognized and a basis in Plum stock of $607,500.
___ $607,500 gain recognized and a basis in Plum stock of $238,000.
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