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 ____ Holding period is ______.

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