IMG 5528.PNG Photos 2 17. Julia adjusted basisoneyBe Corp, her basis in the shar
ID: 2554524 • Letter: I
Question
IMG 5528.PNG Photos 2 17. Julia adjusted basisoneyBe Corp, her basis in the shares is $1,000. Honey Bee's assets have an sp voting 5.000. Wasp Corp acquires all the HoneyBee shares by siving Julia $50,000 a) What is Julia's realized and recognized gain in the transfer of her shares to Wasp? 35100 b) What is Julia's basis in the shares of Wasp she receives? ) What is Wasp's basis in the Honey Bee shares received from Julia? d) What is the basis of the assets owned by Honey Bee after the transaction? suppose Julia only owned 5% of Honey Bee, prior to the transaction wasp owned 77% of Honeybee so e) after the transaction wasp owned 83% of Honey Bee. Does your answer to part (a) above change? bes the answer to part "a" change if Julia receives Wasp voting stock worth $49,000 and $1,000 in class B nonvoting common stock? If it changes explain how. O Type here to search S:10 PM 3/27/2018Explanation / Answer
Answer a): Julia's basis in Honeybee is $1000. Hence when Wasp Corp will acquire all shares of Julia in Honeybee for $50,000, the gain shall be for $49,000 as this the basis of shares sold. $15,000 is the net asset value of Honeybee.
Ans b): On receipt of Wasp Stock in return for stock held in Honeybee, the basis of shares held by Julia would be $50,000.
Ans c): Wasp's basis of shares received shall be $50,000 as this is value of stock given to acquire shares of Honeybee.