Julian Transferred 100 Percent of His Stock in Lemon Company

question 110

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 $200,000. Julian's tax basis in the Lemon stock was $400,000. What amount of loss does Julian recognize in the exchange and what is his basis in the Apricot stock he receives?

• A)$200,000 loss recognized and a basis in Apricot stock of $200,000
• B)No loss recognized and a basis in Apricot stock of $400,000
• C)$200,000 loss recognized and a basis in Apricot stock of $400,000
• D)No loss recognized and a basis in Apricot stock of $200,000

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Definitions:

Market Intelligence

Information relevant to a company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics.

Aggregate Forecasts

Collective predictions regarding future demand, sales, or other metrics for a group of products or services over a certain time period.

Disaggregate Forecasts

The breakdown of comprehensive forecasts into detailed components, typically by product, geography, or customer segment, for more precise planning and management.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values from their mean, indicating how spread out the data points are.