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

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. Determine Mrs. Brinkley's realized and recognized gain on the exchange and the tax basis in her 4,200 M&W shares.

A) $228,500 gain realized and recognized; $340,200 basis in M&W shares
B) $228,500 gain realized and recognized; $111,700 basis in M&W shares
C) $228,500 gain realized and no gain recognized; $111,700 basis in M&W shares
D) None of these choices are correct

Correct Answer:

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