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

---

Definitions:

Structure

The arrangement or organization of atoms within a molecule, defining its molecular geometry and chemical properties.

Trimethylbenzene

This is an aromatic hydrocarbon with three methyl groups attached to its benzene ring, often found in petroleum and used as a solvent or chemical intermediate.

Acceptable Name

A name for a chemical compound that conforms to the nomenclature rules established by the relevant scientific body, such as IUPAC, and is universally recognized.

Methyl Phenyl Ketone

An organic compound, also known as acetophenone, with the formula C8H8O, characterized by a benzene ring attached to a carbonyl group.