Julian Transferred 100 Percent of His Stock in Lemon Company

question 60

Multiple Choice

Julian transferred 100 percent of his stock in Lemon Company to Apricot Corporation in a Type B stock-for-stock exchange. In exchange, he received stock in Apricot with a fair market value of $205,000. Julian's tax basis in the Lemon stock was $410,000. What amount of loss does Julian recognize in the exchange and what is his basis in the Apricot stock he receives?

• A) $205,000 loss recognized and a basis in Apricot stock of $205,000
• B) No loss recognized and a basis in Apricot stock of $410,000
• C) $205,000 loss recognized and a basis in Apricot stock of $410,000
• D) No loss recognized and a basis in Apricot stock of $205,000

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Definitions:

Brand Loyal

The tendency of consumers to continuously purchase one brand's products over the competition.

Environmental Scanning

is the process of systematically gathering information about the external environment to identify potential threats and opportunities.

Competitive Intelligence

The process of gathering, analyzing, and using information about competitors, market trends, and the business environment to support strategic decision making.