Horizon Corp. is owned 75% by Adams and 25% by Black. Horizon had the following assets:

Adjusted Basis FMV

Equipment $ 20,000 $ 60,000

Land 80,000 150,000

Inventory 50,000 40,000

Horizon also had liabilities equal to $20,000. Pubco, a publicly held corporation whose stock trades on the NYSE, wished to acquire Horizons assets. On June 30, 2019, Pubco and Horizon entered into an agreement whereby Pubco acquired all of Horizons assets in exchange for $204,000 of Pubco stock, $26,000 of cash and the assumption of Horizons liabilities.

Pursuant to the plan, upon Horizons receipt of the Pubco stock and cash, it was liquidated and the stock and cash were distributed to Adams and Black. Adams received $170,000 of stock and $2,500 of cash and Black received $34,000 of stock and $23,500 of cash. Adamss basis in her Horizon Corp. stock was equal to $136,500 and Blacks basis in his Horizon Corp. stock was equal to $50,000.

A. What is the nature of the above transaction and is it a good or bad reorganization?

B. Regardless of your answer to question 31, assume that the above transaction is a nonrecognition transaction. Which of the corporate entities, if any, should recognize a gain or loss as a result of the above transactions? If either or both of the corporate entities must recognize gain or loss, what is the amount of that gain or loss?

C. Regardless of your answer to question 31, assume that the above transaction is a nonrecognition transaction. What is the amount of Adams realized gain or loss as a result of the above transaction? How much, if any, of that realized gain or loss should Adams recognize?

D. Regardless of your answer to question 31, assume that the above transaction is a nonrecognition transaction. What is Adams adjusted basis in his Pubco stock?

E. Regardless of your answer to question 31, assume that the above transaction is a nonrecognition transaction. What is the amount of Blacks realized gain or loss as a result of the above transaction? How much, if any, of that realized gain or loss should Black recognize?

F. Regardless of your answer to question 31, assume that the above transaction is a nonrecognition transaction. What is Blacks adjusted basis in his Pubco stock?