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Option (2) Recognized Gain - $0 Basis - $700,000 is INCORRECT.

Pursuant to a reorganization, Clara exchanges 5,000 shares of Bronco Corporation stock that he had purchased for $700,000 for 6,000 shares of Bronco Corporation common stock with a fair market value of $1,000,000. What is Clara's recognized gain on the exchange and his basis in the Bronco stock? Recognized Gain- $0 Basis $1,000,000 Recognized Gain- $0 Basis - $700,000 Recognized Gain- $300,000 Basis $1,000,000 Recognized Gain- $300,000 Basis - $700,000