A shareholder bought 2,000 shares of Zee Corporation for $90,000 several years a

Question

A shareholder bought 2,000 shares of Zee Corporation for $90,000 several years ago. When the stock is valued at $200,000, Zee redeems these shares in exchange for 6,000 shares of Yea Corporation stock. This transaction meets the requirements of § 368. Which of the following statements is true with regard to this transaction

The shareholder has a recognized gain of $110,000. The shareholder has a postponed gain of $110,000. The shareholder has a basis in the Yea stock of $200,000. Gain or loss cannot be determined because the value of the Yea stock is not given. None of the above are true

Explanation / Answer

Gain or loss cannot be determined because the value of the Yea stock is not given. this is a true statement

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