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 afair 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 recognizein 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.

Total gain or loss is the lesser of the amount of profit calculated i.e. (total consideration less…

Answered: Simone transferred 100 percent of her…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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H sold shares of a public company worth $90,000 to a Canadian corporation owned by H and her spouse. The shares had an adjusted cost base of $130,000 at the time of the sale. The corporation continues to own the shares. What is the amount of H's allowable capital loss? Note: Do not place a minus sign in front of the amount.
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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 $670,000 plus $670,000 in cash. Simone's tax basis in the Purple stock was $220,00O. 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. $1,120,000 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.
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