McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 24

Robert and Sylvia propose to have their corporation, Wolverine Universal (WU), acquire another corporation, EMU Inc., in a stock-for-stock Type B acquisition. The sole shareholder of EMU, Edie Eagle, will receive $400,000 of WU voting stock in the transaction. Edie's tax basis in her EMU stock is $100,000.
a. What amount of gain or loss does Edie recognize if the transaction is structured as a stock-for-stock Type B acquisition
b. What is Edie's tax basis in the WU stock she receives in the exchange
c. What is the tax basis of the EMU stock held by WU after the exchange