What basis does Matt take in his remaining? shares

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Question - Clarity Corporation has a single class of common stock outstanding. Matt owns 150 ?shares, which he purchased for $35 per share two years ago. On April 10 of the current? year, Clarity distributes to its common shareholders one right to purchase for $45 one common share for each common share owned. At the time of the? distribution, each common share is worth $80?, and each right is worth $20. On September? 10, Matt sells 75 rights for $5,500 and exercises the remaining 75 rights. On November? 10, he sells for $85 each 60 of the shares acquired through exercise of the rights.

Required -

a. What are the amount and character of income Matt recognizes upon receiving the rights?

b. What are the amount and character of gain or loss Matt recognizes upon selling the rights?

c. What are the amount and character of gain or loss Matt recognizes upon exercising the rights?

d. What are the amount and character of gain or loss Matt recognizes upon selling the newly acquired common shares?

e. What basis does Matt take in his remaining shares?

Reference no: EM133064163

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