Yong owns 100 of Theta Corporation stock having a $600,000 adjusted basis As part of the merger of Theta into Alpha Corporation, Yong exchanges his Theta stock for $750,000 cash and Alpha common stock having a $3 million FMV Yong retains a 60 interest in Alphas 100,000 shares of outstanding stock i...

a Realized gain 3150000 3000000 750000 600000 Boot 750000 Recognized gain 750000 Character of gain d ...

Yong owns 100% of Theta Corporation stock having a $600,000 adjusted basis. As part of the merger

Question:

Yong owns 100% of Theta stock having a $600,000 adjusted basis. As part of the merger of Theta into Alpha Yong exchanges his Theta stock for $750,000 cash and Alpha having a $3 million FMV. Yong retains a 60% interest in Alpha’s 100,000 shares of outstanding stock immediately after the merger.
a. What are the amount and character of Yong’s recognized gain?
b. What is Yong’s basis in the Alpha stock?
c. How would your answers to Parts a and b change if instead Yong’s 60,000 Alpha shares were one-third of Alpha’s outstanding shares? Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...