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

question 23

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 these shares in exchange for 6,000 shares of Yea Corporation stock.This transaction meets the requirements of § 368.Which of the following statements is true with regard to this transaction?

• A)The shareholder has a recognized gain of $110,000.
• B)The shareholder has a postponed gain of $110,000.
• C)The shareholder has a basis in the Yea stock of $200,000.
• D)Gain or loss cannot be determined because the value of the Yea stock is not given.
• E)None of the above are true.

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Definitions:

Investment Fundamentals

The basic factors or considerations, such as earnings, revenue, and market position, that influence the value of an investment.

Financial Adviser

A professional who provides financial services and advice to clients based on their financial situation and goals.

Retirement Portfolio

A collection of financial investments specifically chosen and managed to support an individual's financial needs in retirement.

Stocks

Shares of ownership in a company, that represent a claim on the company's earnings and assets.