Yoko purchased 10% of Toyger Corporation's stock six years ago for $70,000.In a transaction qualifying as a "Type C" reorganization, Yoko received $50,000 cash and 8% of Angora Corporation's stock (valued at $100,000) in exchange for her Toyger stock.Prior to the reorganization, Toyger had $200,000 accumulated earnings and profits and Angora had $300,000.How does Yoko treat the exchange for tax purposes?
A)As a recognized $50,000 long-term capital gain.
B)As a $50,000 dividend.
C)As a $20,000 dividend and a $30,000 capital gain.
D)As a $30,000 dividend and a $20,000 capital gain.
E)None of the above.

Question

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The Answer of Yoko purchased 10% of Toyger Corporation's stock six years ago for $70,000.In a transaction qualifying as a "Type C" reorganization, Yoko received $50,000 cash and 8% of Angora Corporation's stock (valued at $100,000) in exchange for her Toyger stock.Prior to the reorganization, Toyger had $200,000 accumulated earnings and profits and Angora had $300,000.How does Yoko treat the exchange for tax purposes?
A)As a recognized $50,000 long-term capital gain.
B)As a $50,000 dividend.
C)As a $20,000 dividend and a $30,000 capital gain.
D)As a $30,000 dividend and a $20,000 capital gain.
E)None of the above.

Yoko Purchased 10% of Toyger Corporation's Stock Six Years Ago