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:

Personal Biases

The predispositions or inclinations people have that can sway their judgment or decisions, often unconsciously.

Ecological-systems Approach

A framework for understanding the complex interrelations between organisms and their environments, taking into account both immediate and broader socio-cultural contexts.

Cultural Values

The core principles and ideals upon which an entire community exists and functions.

Environmental Influences

Factors in a person's surroundings that affect their development and behavior, such as social relationships, culture, and physical settings.