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:

True Value

The actual, inherent value of an asset, not influenced by market movements, speculation, or other external factors.

Expropriation

The act of a government seizing privately owned property, often without fair compensation, for public use or in the interest of the public.

Political Entity

Refers to any organization that holds a set of political powers and responsibilities, such as a nation, state, or government.

Sovereignty

The supreme authority within a territory, allowing it to govern itself or make decisions independently.