Mr Ricardo Exchanged 75 Shares of Haslet Common Stock for 516

question 70

Multiple Choice

Mr. Ricardo exchanged 75 shares of Haslet common stock for 516 shares of Newland common stock pursuant to a reorganization of the two corporations. His basis in the Haslet stock was $49,200, and the fair market value of the Newland stock was $138,000. Which of the following statements about the exchange is true?

• A) Mr. Ricardo recognizes no gain and takes a $138,000 basis in the Newland stock.
• B) Mr. Ricardo recognizes an $88,800 gain and takes a $138,000 basis in the Newland stock.
• C) Mr. Ricardo recognizes no gain and takes a zero basis in the Newland stock.
• D) Mr. Ricardo recognizes no gain and takes a $49,200 basis in the Newland stock.

---

Definitions:

Entertains

To hold the attention of an audience by amusing or engaging them, often used in the context of performance arts or media.

Validates

Confirms or supports something as true, valuable, or worthwhile.

Persuasive

Having the power to convince or influence others towards a certain viewpoint or action through logical reasoning, emotional appeal, or other techniques.

Goodwill

The positive reputation and intangible asset of a business, derived from customer perception, relationships, and loyalty.