What is the basis of the stock to Gigi

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Problem - Critical Thinking Gigi transfers real estate (basis of $60,000 and fair market value of $40,000) to Monarch Corporation in exchange for shares of § 1244 stock. (Assume that the transfer qualifies under § 351.)

Required -

a. What is the basis of the stock to Gigi? (Gigi and Monarch do not make an election to reduce her stock basis.)

b. What is the basis of the stock to Gigi for purposes of § 1244?

c. If Gigi sells the stock for $38,000 two years later, how will the loss be treated for tax purposes?

Reference no: EM132661845

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