What is the value of stock transferred from lime to lemon

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Question - Lemon Corporation enters into a merger with Lime Corporation. Lemon has assets valued at $900,000 (basis of $980,000) and liabilities of $600,000. Lime transfers its stock for 90% of Lemon's assets and liabilities. Lemon distributes the Lime stock and its remaining asset (value of $90,000, adjusted basis of $80,000) subject to a liability ($60,000) to its shareholder, Lea, in exchange for her Lemon stock. Lea's basis in her Lemon stock is $350,000. Lemon liquidates after collecting all of its stock from Lea.

a. What is the value of stock transferred from Lime to Lemon?

b. What is the amount of gain (loss) realized and recognized by Lea from the merger? What is Lea's basis in her Lime stock?

c. What is the amount of gain (loss) realized and recognized by Lemon and Lime from the merger? What is Lime's basis in Lemon's assets?

Reference no: EM131793697

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