Question: Hosha exchanges all of her Leaf stock for Petal stock

Hosha exchanges all of her Leaf stock for Petal stock plus $5,000 cash. The exchange is pursuant to a tax-free reorganization. Hosha paid $25,000 for the Leaf stock five years ago. The Petal stock received by Hosha has an $18,000 fair market value.
a. What is Hosha's realized and recognized gain/loss from the reorganization?
b. What is Hosha's basis in the Petal stock she received?

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  • CreatedSeptember 09, 2015
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