Jasmine Transferred 100 Percent of Her Stock in Woodward Company

Multiple Choice

Jasmine transferred 100 percent of her stock in Woodward Company to Jefferson Corporation in a Type A merger. In exchange, she received stock in Jefferson with a fair market value of $600,000 plus $400,000 in cash. Jasmine's tax basis in the Woodward stock was $1,500,000. What amount of loss does Jasmine recognize in the exchange and what is her basis in the Jefferson stock she receives?

A) $500,000 loss recognized and a basis in Jefferson stock of $600,000
B) $500,000 loss recognized and a basis in Jefferson stock of $1,100,000
C) No loss recognized and a basis in Jefferson stock of $1,500,000
D) No loss recognized and a basis in Jefferson stock of $1,100,000