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Nikitich [7]
3 years ago
8

Celeste transferred 100 percent of her stock in Supply Chain Company to Marketing Corporation in a Type A merger. In exchange, s

he received stock in Marketing with a fair market value of $500,000 plus $500,000 in cash. Celeste's tax basis in the Supply Chain stock was $1,200,000. What amount of loss does Celeste recognize in the exchange and what is her basis in the Marketing stock she receives
Business
1 answer:
Vesna [10]3 years ago
4 0

Answer:

Loss = $200,000

Stock basis = $700,000

Explanation:

The computation of loss and stock basis is shown below:-

Since there is exchange in deferred tax so no loss will be recognized

Stock basis = Carryover Basis - Cash received

= $1,200,000 - $500,000

= $700,000

Therefore, if Celeste sell stocks $700,000, she will be in loss of $200,000

= $700,000 - $500,000

= $200,000

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