Quail Corporation was created six years ago through contributions from Kasha ($900,000) and Frank ($100,000). In a transaction qualifying as a reorganization, Quail exchanges all of its assets currently valued at $1,800,000 (basis of $1,200,000) for 12,000 shares of Covey Corporation stock valued at $1,700,000 plus $100,000 in Covey bonds. Quail distributes the Covey stock and bonds proportionately to Frank and Kasha in exchange for their stock in Quail. Quail's current and accumulated E & P before the reorganization amounts to 70,000 If an amount is zero, enter "O". Complete the computations below for Kasha and Frank regarding this transaction Kasha: Recognized Gain/Loss Postponed Gain/Loss Realized Basis in Gain/Loss Stock $1,620,000 Bonds Frank: Recognized Gain/Loss Postponed Gain/Loss Realized Basis in Gain/Loss Stock $180,000 Bond
The character of Kasha and Frank's gain is .