Cat Corporation is acquiring Bird Corporation by exchanging 100,000 shares of Cat stock and $80,000 cash for all of Bird's assets (valued at $500,000),liabilities ($200,000),and accumulated earnings and profits ($120,000).Betty purchased 40% of Bird five years ago for $60,000 and Keith purchased the remaining 60% for $90,000.What is the amount and character of the gain or loss Betty and Keith recognize,assuming that the reorganization qualifies as a "Type A" reorganization? What is the basis in their new Cat Corporation stock?

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The Answer of Cat Corporation is acquiring Bird Corporation by exchanging 100,000 shares of Cat stock and $80,000 cash for all of Bird's assets (valued at $500,000),liabilities ($200,000),and accumulated earnings and profits ($120,000).Betty purchased 40% of Bird five years ago for $60,000 and Keith purchased the remaining 60% for $90,000.What is the amount and character of the gain or loss Betty and Keith recognize,assuming that the reorganization qualifies as a "Type A" reorganization? What is the basis in their new Cat Corporation stock?

Cat Corporation Is Acquiring Bird Corporation by Exchanging 100,000 Shares