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.
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.
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 43P
Related questions
Question
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a827890-2915-4a1d-bd3a-77e5b8a42c8a%2Fd1a840ea-6bf5-4777-abd3-d68d0202c584%2Fk33c6m_processed.png&w=3840&q=75)
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 $220,00O. 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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