Johnson Inc

question 99

Multiple Choice

Johnson Inc. and C&K Company entered into an exchange of real property. Here is the information for the properties to be exchanged.
Pursuant to the exchange, C&K paid $25,000 cash to Johnson and assumed the mortgage on the Johnson property.
-Compute C&K's gain recognized on the exchange and its tax basis in the property received from Johnson.

• A) $200,000 gain recognized; $662,000 basis in Johnson property.
• B) No gain recognized; $462,000 basis in Johnson property.
• C) No gain recognized; $487,000 basis in Johnson property.
• D) None of the choices are correct.

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Definitions:

Chapter 11 Reorganization

Chapter 11 Reorganization refers to a provision under the U.S. bankruptcy code that allows a business to restructure its debt and operations in order to return to profitability under court supervision while continuing to operate.

Stockbrokers

Professionals who buy and sell stocks and other securities on behalf of clients, usually for a fee or commission.

Corporate Debtors

Businesses that owe money to creditors and are responsible for repaying debt.

Reaffirmation Agreement

A legal document filed in bankruptcy proceedings where the debtor agrees to repay a portion or all of an outstanding debt.