A Shareholder Bought 2,000 Shares of Zee Corporation for $90,000

question 30

Multiple Choice

A shareholder bought 2,000 shares of Zee Corporation for $90,000 several years ago.When the stock is valued at $200,000, Zee redeems the shares in exchange for 6,000 shares of Yea Corporation stock and a $20,000 car not wanted by Yea.This transaction meets the requirements of § 368. Which of the following statements is true with regard to this transaction?

• A)The shareholder has a realized gain of $130,000.
• B)The shareholder has a postponed gain of $110,000.
• C)The shareholder has a basis in the Yea stock of $90,000.
• D)The shareholder has a recognized gain of $20,000.
• E)All of the above statements are true.

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Definitions:

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