Question $32$

Mr$.$ Ricardo exchanged $75$ shares of Haslet common stock for $516$ shares of Newland common stock pursuant to a reorganization of the two corporations. His

basis in the Haslet stock was $$49,200,$ and the fair market value of the Newland stock was $$138,000.$ Which of the following statements about the exchange

is true?

Mr$.$ Ricardo recognizes no gain and takes a $$138,000$ basis in the Newland stock.

Mr$.$ Ricardo recognizes an $$88,800$ gain and takes a $$138,000$ basis in the Newland stock.

Mr$.$ Ricardo recognizes no gain and takes a zero basis in the Newland stock.

Mr$.$ Ricardo recognizes no gain and takes a $$49,200$ basis in the Newland stock.