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What amount of gain does simone recognize in the exchange

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Problem 1: Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a TypeA merger. In exchange, she received stock in Plum with a fair market value of $552,500 plus $552,500 in cash. Simone's tax basis in the Purple stock was $203,000. What amount of gain does Simone recognize in the exchange and what is her basis in the Plum stock she receives?

a. $902,000 gain recognized and a basis in Plum stock of $1,105,000
b. $902,000 gain recognized and a basis in Plum stock of $552,500
c. $552,500 gain recognized and a basis in Plum stock of $552.500
d. $552,500 gain recognized and a basis in Plum stock of $203,000

Reference no: EM132780936

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