Business, 20.02.2020 03:28 alexussaniyah

Jermaine owns all 200 shares of Peach Corporation stock valued at $50,000. Kenya, a new shareholder, receives 200 newly issued shares from Peach Corporation in exchange for inventory with an adjusted basis of $40,000 and an FMV of $50,000. Which of the following statements is correct?

A. Kenya may defer the recognition of any tax until the stock is sold.
B. The transaction results in $10,000 of capital gain for Kenya.

C. The transaction results in $10,000 of ordinary income for Kenya.

D. No gain will be recognized by Kenya.

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Jermaine owns all 200 shares of Peach Corporation stock valued at $50,000. Kenya, a new shareholder,...

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