Acquiring Corporation transfers $500,000 stock and land with a value of $400,000 (basis of $250,000) to Target for most of its assets. The assets Target does not transfer to Acquiring in the “Type A” reorganization are distributed to Target’s shareholder, Tia. They are valued at $100,000 (basis of $120,000). Acquiring stock and the land also are distributed to Tia in exchange for her stock in Target. Tia’s basis in her Target stock is $650,000.

Required:

Show supporting computations for all answers to the following questions.

1.   What amount of gain or loss is recognized by Acquiring Corporation?
2.   What amount of gain or loss is recognized by Target Corporation?
3.   What amount of gain or loss is recognized by Tia?
4.   What is Tia’s basis in the Acquiring stock she receives?