Mrs Brinkley Transferred Business Property (FMV $340,200; Adjusted Tax Basis

Multiple Choice

Mrs. Brinkley transferred business property (FMV $340,200; adjusted tax basis $111,700) to M&W Inc. in exchange for 4,200 shares of M&W stock. Immediately after the exchange, M&W had 7,800 shares of outstanding stock. Compute M&W's recognized gain on its exchange of stock for property and determine M&W's tax basis in the property received from Mrs. Brinkley.

A) No gain recognized; $111,700 tax basis in property
B) No gain recognized; $340,200 tax basis in property
C) $340,200 gain recognized; $111,700 tax basis in property
D) $111,700 gain recognized; $111,700 tax basis in property