Answer:
b. No gain recognized and a basis in Azul stock of $400,000
Explanation:
Data provided in the question
Transferred percentage = 100%
The fair market value of the stock he received is $1,000,000
And, the tax basis in the Rosa stock is $400,000
So by considering the above information, the $0 gains is recognized and his basis should equal to the tax basis i.e in the rosa stock i.e $400,000
Plus if the stock is sold for $1,000,000 than there would be a gain of $600,000 but in this case there is zero gain recognized
Hence, the option b is correct
