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

question 3

Multiple Choice

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. Barbara must recognize a gain of

• A)$0.
• B)$200,000 dividend income.
• C)$200,000 capital gain.
• D)$650,000 capital gain.

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Definitions:

Erikson

A psychologist known for his theory on the psychosocial development of human beings.

Mistrust

Lack of trust or confidence in someone or something, often stemming from experiences of betrayal or inconsistency.

Basic Emotions

Emotions that are universal in humans, appear early in life, and are thought to have a long evolutionary history; includes happiness, interest, surprise, fear, anger, sadness, and disgust.

Emotional Expression

The way individuals display their emotions through facial expressions, gestures, and vocal tones.