Question

In a qualifying reorganization, Cato exchanges $5,455,000 worth of stock and property valued at $2,182,000 ($1,091,000...

In a qualifying reorganization, Cato exchanges $5,455,000 worth of stock and property valued at $2,182,000 ($1,091,000 basis) for all of Firestar's assets, which have a value of $7,637,000 and a $1,527,400 basis. Firestar distributes the property received from Cato. The exchange meets the § 368 requirements.

If an amount is zero, enter '0".

a. What is Cato's recognized gain/loss from the reorganization?
Cato recognizes a gain of $.

b. What is Firestar's recognized gain/loss from the reorganization?
Firestar recognizes a no gain no loss of $.

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Answer #1

b) As firestar just distribute the property received from Cato their is no recognized gain or loss at $0.

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