Question

Axle Corporation acquires​ 100% of Drexel​ Corporation's stock from​ Drexel's shareholders for​ $500,000 cash. Drexel Corporation has assets with a​ $600,000 adjusted basis and an​ $800,000 FMV. The assets are subject to​ $200,000 in liabilities. Drexel Corporation shareholders purchased their stock eight years ago for​ $300,000. Axle​ Corporation's basis in the Drexel Corporation stock is:

Answer 1

Answer:

$500000

Explanation:

A stock basis is the purchase price of the stock after commissions and expenses. Axle​ Corporation's basis in the Drexel Corporation stock is $500000 because the basis of a stock is its cost.  Drexel Corporation assets and their liabilities in liabilities are not needed in the purchase of a stock. The basis of property shall be the cost of such property and not including the property taxes

Answer 2

Answer:

$500,000 Axle​ Corporation's basis in the Drexel Corporation stock.