Question
Broom Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $400,000 to Docker Corporation in exchange for $400,000 of Docker Corporation
Broom Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $400,000 to Docker Corporation in exchange for $400,000 of Docker Corporation stock as part of a tax-free reorganization. The Docker stock had been purchased from its shareholders one year earlier for $350,000. How much gain do Broom and Docker Corporations recognize on the asset transfer?
Broom | Docker |
$0 | $50,000 |
Broom | Docker |
$100,000 | $0 |
Broom | Docker |
$100,000 | $50,000 |
Broom | Docker |
$0 | $0 |
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