Quail Corporation was created six years ago through contributions from Kasha ($900,000) and Frank ($100,000) In a transaction qualifying as a reorganization, Quail exchanges all of its assets currently valued at $1,800,000 (basis of $1,200,000) for Covey Corporation stock valued at $1,700,000 plus $100,000 in Covey bonds Quail distributes the Covey stock and bonds proportionately to Frank and Kasha in exchange for their stock in Quail Quail's current and accumulated E P before the reorganization amounts to $70,000 If an amount is zero, enter 0 a Complete the computations below for Kasha and Frank regarding this transaction Kasha Realized Gain Loss Recognized Gain Loss Postponed Gain Loss Basis In Stock $1,620,000 $90,000 $ $ $900,000 Bond $ $ $720,000 $ $ $ Frank Realized Gain Loss Recognized Gain Loss Postponed Gain Loss Basis In Stock $180,000 $10,000 $ $ $100,000 Bond $ $ $80,000 $ $ $ How do Kasha and Frank treat this transaction for income tax purposes Kasha Ordinary income $ 0 Dividend income $ Capital gain income $ Frank Ordinary income $ 0 Dividend income $ Capital gain income $ b Complete the statement below regarding how Quail and Covey should treat this transaction, including Covey's basis in the assets it receives from Quail Quail recognizes $ 0 gain or loss on the reorganization Covey's basis in the Quail assets is a carryover basis of $

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Quail Corporation was created six years ago through contributions from Kasha ($900,000) and Frank ($100,000). In a transaction qualifying as a reorganization, Quail exchanges all

Quail Corporation was created six years ago through contributions from Kasha ($900,000) and Frank ($100,000). In a transaction qualifying as a reorganization, Quail exchanges all of its assets currently valued at $1,800,000 (basis of $1,200,000) for Covey Corporation stock valued at $1,700,000 plus $100,000 in Covey bonds. Quail distributes the Covey stock and bonds proportionately to Frank and Kasha in exchange for their stock in Quail. Quail's current and accumulated E & P before the reorganization amounts to $70,000.

If an amount is zero, enter "0".

a. Complete the computations below for Kasha and Frank regarding this transaction.

Kasha:

Realized Gain/Loss		Recognized Gain/Loss		Postponed Gain/Loss		Basis In Stock
	$1,620,000		$90,000		$		$
	$900,000		Bond		$		$
	$720,000		$		$		$

Frank:

Realized Gain/Loss		Recognized Gain/Loss		Postponed Gain/Loss		Basis In Stock
	$180,000		$10,000		$		$
	$100,000		Bond		$		$
	$80,000		$		$		$

How do Kasha and Frank treat this transaction for income tax purposes?

Kasha: Ordinary income: $____0____ Dividend income: $________ Capital gain income: $________

Frank: Ordinary income: $____0___ Dividend income: $________ Capital gain income: $_________

b. Complete the statement below regarding how Quail and Covey should treat this transaction, including Covey's basis in the assets it receives from Quail. Quail recognizes $____0___ gain or loss on the reorganization. Covey's basis in the Quail assets is a carryover basis of $_________.