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6. Pursuant to a tax-free reorganization in the current year, Jodie exchanged 100 shares of Torchwood Corporation stock for 100 shares of Tardis Corporation stock.
6. Pursuant to a tax-free reorganization in the current year, Jodie exchanged 100 shares of Torchwood Corporation stock for 100 shares of Tardis Corporation stock. In addition, she received $1,000 cash, which was not in excess of her ratable share of Torchwood earnings and profits. Jodie purchased the Torchwood stock for $20,000 eighteen years ago. The Tardis stock had a fair market value of $24,000 on the date of the exchange and represented a 5 percent interest in the outstanding Tardis stock. What is the recognized income to be reported by Jodie? a. $0 b. $1,000 dividend c. $1,000 long-term capital gain d. $5,000 long-term capital gain
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