Baxter Corporation Transfers Assets with an Adjusted Basis of $300,000

question 73

Essay

Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders is $120,000. What is Frank's basis in the Duke stock he receives?

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Definitions:

Biotechnology

The use of living organisms or other biological systems in the production of drugs, agricultural products, and technologies.

Atomic Bomb

A weapon of mass destruction that releases energy through nuclear reactions, causing significant destruction and radiation exposure.

Robert Oppenheimer

A physicist known as the "father of the atomic bomb" for his role in the Manhattan Project, the World War II project that developed the first nuclear weapons.

Leslie Groves

A U.S. Army Corps of Engineers officer and the director of the Manhattan Project, the project during World War II that developed the first nuclear weapons.