Pursuant to a plan of corporate reorganization adopted in the current year, Travis exchanged 1,000 shares of Lavender Corporation common stock which he had purchased for $200,000 for 1,200 shares of Indigo Corporation common stock that have a fair market value of $400,000.As a result of the exchange, Travis's recognized gain and his basis in the Indigo stock are:

Question

Quizplus · Accepted Answer

In a corporate reorganization, if the exchange qualifies as a tax-free reorganization under IRC Section 368, no gain or loss is recognized. Travis's basis in the Indigo stock is the same as his basis in the Lavender stock, which is $200,000.

Pursuant to a Plan of Corporate Reorganization Adopted in the Current