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Scooby and Shaggy form Mistic, Inc. each receiving the following amount of Mistic stock ( representing all of its outstanding stock ) in exchange for
Scooby and Shaggy form Mistic, Inc. each receiving the following amount of Mistic stock representing all of its outstanding stock in exchange for the following property:
Common Stock Preferred Stock
Scooby Shares Shares
Shaggy Shares Shares
Scooby Shaggy
Asset FMV $ $
Asset Basis
Shaggy can require Mistic to redeem all of his stock at his option at any time for times the value of of Mistic's fair market value. The preferred stock has an cumulative dividend rate but is otherwise nonparticipating in dividends and and nonparticipating in growth.
Required: Compute both Scooby and Shaggy's realized and recognized gain or loss on the transactions above. SHOW YOUR WORK AND EXPLAIN.
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