Julian transferred 100 percent of his stock in Lemon Company to Apricot Corporation in a Type B stock-for-stock exchange. In exchange, he received stock in Apricot with a fair market value of $322,500. Julian's tax basis in the Lemon stock was $645,000. What amount of loss does Julian recognize in the exchange and what is his basis in the Apricot stock he receives?

Multiple Choice

• No loss recognized and a basis in Apricot stock of $322,500

• $322,500 loss recognized and a basis in Apricot stock of $645,000

• No loss recognized and a basis in Apricot stock of $645,000

• $322,500 loss recognized and a basis in Apricot stock of $322,500