Celeste transferred 100 percent of her stock in Supply Chain Company to Marketing Corporation in a Type A merger. In exchange, she received stock in Marketing with a fair market value of $580,000 plus $580,000 in cash. Celeste's tax basis in the Supply Chain stock was $1,385,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives?

Multiple Choice

• $225,000 loss recognized and a basis in Marketing stock of $1,385,000.

• No loss recognized and a basis in Marketing stock of $1,385,000.

• $225,000 loss recognized and a basis in Marketing stock of $805,000.

• No loss recognized and a basis in Marketing stock of $805,000.