Acme Corporation Acquires Fisher Corporation's Assets in a Type a Reorganization

question 24

Essay

Acme Corporation acquires Fisher Corporation's assets in a Type A reorganization for $800,000 of Acme's nonvoting preferred stock and $200,000 (face amount and FMV)of securities. The assets have an adjusted basis of $600,000 and an FMV of $1,500,000. In addition, Acme Corporation assumes $500,000 of Fisher's liabilities. At the time of the transfer, Acme's E&P is $400,000. Fisher distributes the stock and securities to its sole shareholder Barbara for all of her Fisher stock. After the reorganization, Barbara owns 25% of Acme's stock. Barbara has an adjusted basis of $400,000 in her Fisher stock. What is Barbara's basis for her Acme stock?

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Definitions:

Unconsciously Craves

Desires or wants that individuals are not fully aware of but influence their behavior and decisions.

Positive Feedback

A process in which the effects of a small disturbance on a system include an increase in the magnitude of the perturbation.

Innate Talent

Natural abilities or proficiency in certain activities or fields present from birth or without the need for learning.

Secretly Hates

A condition where an individual harbors negative feelings or animosity towards someone or something, but does not openly express it.