Cocoa Corporation is acquiring Milk Corporation in a "Type A" reorganization by exchanging 40% of its voting stock and $50,000 for all of Milk's assets (value of $850,000 and basis of $600,000)and liabilities ($200,000).The shareholders of Milk are Elsie (650 shares)and Ferdinand (350 shares).They bought their stock for $500 per share.What is the amount of gains or losses that Elsie and Ferdinand will recognize due to the reorganization? What is the value of the stock they received from Cocoa and what is their basis in the Cocoa stock?

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The Answer of Cocoa Corporation is acquiring Milk Corporation in a "Type A" reorganization by exchanging 40% of its voting stock and $50,000 for all of Milk's assets (value of $850,000 and basis of $600,000)and liabilities ($200,000).The shareholders of Milk are Elsie (650 shares)and Ferdinand (350 shares).They bought their stock for $500 per share.What is the amount of gains or losses that Elsie and Ferdinand will recognize due to the reorganization? What is the value of the stock they received from Cocoa and what is their basis in the Cocoa stock?

Cocoa Corporation Is Acquiring Milk Corporation in a "Type A