6. Recap Corp has assets worth $500 with an adjusted basis of $125, The company has common stock outstanding and bonds held by creditors, including some bonds held by shareholders. Ernie, a bondholder exchanges $100,000 of 5% bonds in exchange for $100,000 of voting stock in Recap. His basis in the bonds was $95,000. a) Does Ernie recognize gain or loss on the exchange and if so, how much? b) What is Ernie's basis in the stock he receives? c) Does Recap recognize gain or loss on the transfer? Why or why not? d) Ernie also receives $2,000 of stock in exchange for interest owed on the bonds. Is Ernie taxed on receipt of the stock? e) What is Ernie"s basis in the stock received for the interest? f) Suppose Ernie receives in exchange for his $100,000 bonds paying interest at 5%, $120,000 of bonds paying interest at 4%. Assume the bonds are worth their face value. Is Ernie taxed on this transaction and if yes, how much income does he have? g) Hilda owns common stock in Recap. Her basis in the stock was $92,000. She exchanges the stock for $100,000 in Recap 3% bonds worth $98,000. What if any gain or loss does Hilda recognize? h) Suppose instead Hilda exchanged her stock for $100,000 of new Recap preferred stock worth $100,000. Would Hilda recognize gain or loss and if so, how much? i) If Recap changes its name to Pacer does Pacer (formerly known as Recap) recognize gain or loss, and if so, what if anything happens to the adjusted basis of the assets inside it? HTML Editora HE