Rx Corp wants to acquire all the stock of Vit B corp. Vit B is wholly owned by Honey, an individual shareholder who has owned the stock for 5 years. Honeys basis in Vit B is $75. Vit Bs assets are worth $200 and the adjusted basis of those assets is $40. If Rx gives Honey voting stock in Rx worth $250 in exchange for all the Vit B shares

1. How much gain or loss does Honey recognize on the transaction?

2.Explain why or why not a Section 338 election could be made in the previous question.

3.What is Honeys adjusted basis and holding period in the Rx shares she receives? Adjusted basis is

4. What is Vit Bs basis in the Vit B assets which it continues to own?