Problem associated to fair market value

Reference no: EM13158070

Joe owns 100% of Green Corporation (E & P) of $500,000 and 100% of Navy Corporation (E & P of $400,000). Joe sells 100 shares in Green (basis of $40,000) to Navy for $70,000, its fair market value. Joe purchased the stock in Green six years ago.

Joe has:

a. A long-term capital gain of $30,000

b. A long-term capital gain of $70,000

c. Dividend income of $30,000

d. Dividend income of $70,000

e. None of the above

Reference no: EM13158070

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Problem associated to fair market value : Joe owns 100% of Green Corporation (E & P) of $500,000 and 100% of Navy Corporation (E & P of $400,000). Joe sells 100 shares in Green (basis of $40,000) to Navy for $70,000, its fair market value. Joe purchased the stock in Green six years ago.

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