Exercise 7-13 (Algorithmic) (LO. 2)

Townsend, the sole shareholder of Pruett Corporation, has a $902,000 basis in his stock. He exchanges his Pruett stock for $1,127,500 of Rogers voting common stock plus the land with a fair market value of $225,500 and basis of $56,375 that is transferred by Rogers to Pruett. This exchange qualifies under 368.

If an amount is zero or there is no gain or loss, enter "0".

a.What is Townsend's recognized gain/loss from the reorganization?

Townsend recognizesa gain

of $.

b.What is the gain/loss recognized by Pruett Corporation and Rogers Corporation on the reorganization?

Rogers Corporation recognizesa gain

of $and Pruett Corporation recognizesno gain or loss

of $.

c.What is Townsend's basis in the Rogers stock and the land?

The basis in the stock is $and the basis in the land is $.