QUESTION 31 T-Rex Corporation transfers 40% of its stock and $50,000 in cash to Eastern Corporation for $500,000 of assets and all $200,000 of its liabilities. Eastern exchanges the T-Rex stock, cash, and its remaining $100,000 of assets with its shareholders for all of their stock in Eastern. After the exchange, Eastern liquidates. The exchange does not qualify as a tax-free reorganization. True False QUESTION 32 Ursula purchased stock in Purple, Inc., 6 years ago for $150,000. Purple has assets with a value of $225,000 ($175,000 basis) and liabilities of $60,000. Purple transfers $200,000 of assets and all of its liabilities to Orange Corporation in exchange for Orange common stock. Purple distributes the Orange stock and its $25,000 remaining asset (cash) to Ursula in exchange for all of her Purple stock. Purple then liquidates. Ursula recognizes a gain of