RCorp has assets worth $1,500 with an adjusted basis of $250, The company has common stock outstanding and bonds held by creditors. Ernie, a bondholder exchanges $100,000 of 5% bonds in exchange for $100,000 of voting stock in RCorp. His basis in the bonds was $95,000 and he acquired the bonds 8 years ago.

Suppose instead Ernie was a common stock shareholder. His basis in the stock was $92,000. He exchanges the stock for $100,000 in Rcorp 3% bonds worth $98,000.

1. What if any gain or loss does Ernie recognize?

2. What is Ernie's basis in the bonds he receives for the stock? [answer1]

3. What is Ernie's holding period in the bonds?

4. If Rcorp changes its name to Capre how much gain or loss does Capre (formerly known as Rcorp) recognize? [answer1]