Simon Transferred 100 Percent of His Stock in Idol Company

question 85

Essay

Simon transferred 100 percent of his stock in Idol Company to Bobcat Corporation in a Type A merger. In exchange he received stock in Bobcat with a fair market value of $2,000,000 plus $500,000 in cash. Simon's tax basis in the Idol stock was $1,500,000. What amount of gain does Simon recognize in the exchange and what is his basis in the Bobcat stock he receives?

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Definitions:

Time-Out

A disciplinary technique in which for a short span of time a child is required to discontinue his involvement in ongoing activities to quietly sit somewhere apart. This technique involves mild power assertion and is suitable for use with toddlers and preschoolers.

Love Withdrawal

One method parents use to enforce control of children’s behavior involves parents withdrawing attention or affection, expressing disappointment or disillusionment with a child, turning away from a child, cutting off verbal or emotional contact, or enforcing separations. Generates high anxiety and elicits immediate compliance.

Material Self

Aspects of an individual's self-concept related to physical objects, possessions, and physical appearance.