On July 1, in Connection with a Recapitalization of Yorktown

question 28

Essay

On July 1, in connection with a recapitalization of Yorktown Corporation, Robert Moore exchanges 1,000 shares of Yorktown preferred stock, which cost him $95,000, for 1,000 shares of Yorktown common stock worth $108,000 and bonds having a principal amount of $10,000 and an FMV of $10,500. What is the amount of Moore's realized and recognized gain?

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Definitions:

Article 6

A reference that may pertain to a specific clause within a legal document or constitution, requiring context for an accurate definition.

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or defects, and thereby obtains legal protection.

Knowledge of Defect

Awareness of a flaw or imperfection in a product or service before a transaction or agreement.

Inadvertently Sells

The act of selling something accidentally or without the intention of doing so.