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Kelly owns all the stock in Duncan Corp.
Her Duncan stock has a basis of $120,000
and a fair market value of $150,000.
Duncan Corp. is merged into Munro Corp.
Pursuant to the reorganization, Kelly receives
Munro preferred stock worth $50,000 and
Munro common stock worth $100,000 in
exchange for her Duncan Corp. stock.
a.
What is the amount and character of
Kellys realized and recognized gain?
b.
What is Kellys tax basis for her Munro
Corp. preferred stock and common stock?
Answer & Explanation
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