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 $513,500 plus $513,500 in cash. Celeste's tax basis in the Supply Chain stock was $1,340,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives?

Multiple Choice

• $313,000 loss recognized and a basis in Marketing stock of $1,340,000.

• No loss recognized and a basis in Marketing stock of $1,340,000.

• $313,000 loss recognized and a basis in Marketing stock of $826,500.

• No loss recognized and a basis in Marketing stock of $826,500.