Dan exchanged his $350,000 of bonds and $75,000 of stock (basis $10,000) in Mask
ID: 2501908 • Letter: D
Question
Dan exchanged his $350,000 of bonds and $75,000 of stock (basis $10,000) in Mask Corporation for $50,000 of stock and $375,000 in bonds of Narrow Corporation. Which is Dan's recognized gain or loss, and what is Dan's basis in his stock?
Dan has a recognized gain of $25,000 and a basis in his stock of $10,000.
Dan has a recognized gain of $25,000 and a basis in his stock of $40,000.
Dan has a recognized loss of $25,000 and a basis in his stock of $40,000.
Dan has a realized loss of $25,000, no recognized loss, and a basis in his stock of $40,000.
None of the above
Explanation / Answer
Dan has a recognized gain of $25,000 and a basis in his stock of $40,000.
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