To divide the business, Jean transfers the cookware assets to Cookware Corporation in exchange for all of

Question:

To divide the business, Jean transfers the cookware assets to Cookware in exchange for all of Cookware stock. Jean transfers the home appliance assets to Home Appliance in exchange for all of Home Appliance stock. Jean transfers the Cookware stock to Bill in exchange for all of his Jean stock. Jean transfers the Home Appliance stock to Bob in exchange for all of his Jean stock. Finally, Jean liquidates with its remaining cash used to pay off its liabilities.
a. What gain or loss is recognized on the transfer of the Jean assets to Cookware and Home Appliance? What basis do the two corporations take in the assets transferred?
b. What gain or loss do Bill and Bob recognize when they exchange their Jean stock for the Cookware and Home Appliance stock? What basis does each shareholder take in his or her new stock?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...