Question
Reorganizations T co. was merged into P co. pursuant to a statutory merger. Joe, a T co. shareholder, exchanged his T co. stock ($65,000 FMV,
Reorganizations
T co. was merged into P co. pursuant to a statutory merger.
Joe, a T co. shareholder, exchanged his T co. stock ($65,000 FMV, $20,000 basis) for $40,000 P co. stock, $20,000 cash, and a P co. security (principal amount and FMV $5,000).
Pursuant to the merger, T co. transferred to P co. its sole asset ($400,000 FMV, $200,000 basis) and liabilities ($300,000).
Assume all judicial doctrines have been satisfied.
1) Joe's realized and recognized gain, respectively, is?
None of these.
$45,000 and $25,000.
$40,000 and 0.
$45,000 and $20,000.
2) Joe's basis in the P co. stock and P co. security, respectively, is?
None of these.
$45,000 and $5,000.
$20,000 and $5,000.
$40,000 and $5,000.
3) P co.s recognized gain and basis in the assets received from T co., respectively, is?
0 and $200,000.
None of these.
$60,000 and $260,000.
0 and $300,000.
4) T co.'s recognized gain is
$25,000, due to the cash and bonds received.
$100,000, due to the assumed liabilities.
0.
None of these.
5) If Joe had also surrendered T co. securities in the exchange, with a principal amount and FMV of $3,000, and Joe's basis in the securities was $1,000, what would Joe's recognized gain be?
0
$22,000
None of these.
$25,000
$24,000
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