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16 January, 15:17

Hosha exchanges all of her leaf stock for petal stock plus $5,000 cash. the exchange is pursuant to a tax-free reorganization. hosha paid $25,000 for the leaf stock five years ago. the petal stock received by hosha has an $18,000 fair market value. if an amount is zero, enter "0".

a. what is hosha's realized and recognized gain/loss from the reorganization

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  1. 16 January, 15:24
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    Her realized loss is 18K-5K=13K-25K=-12K

    her recognized loss is - 5K

    her postponed loss is - 12K - (5) = - 7k

    basis in petal stock = 18K - (7) = 25K
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