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Cashew Corporation gives its voting stock worth $900,000 and a building worth $300,000 with a basis...

Cashew Corporation gives its voting stock worth $900,000 and a building worth $300,000 with a basis of $375,000 for the assets of Brazil Corporation worth $1,200,000 and basis of $700,000. Brazil distributes the stock in Cashew Corporation to its sole shareholder. Which, if any, of the following statements regarding this transaction is correct?

Cashew recognizes a loss of $75,000 on the transaction.

Cashew recognizes a loss of $75,000 on the transaction.

Brazil recognizes a gain of $300,000 on the transaction.

Brazil recognizes a gain of $300,000 and Cashew recognizes a loss of $75,000 on the transaction.

None of the above.
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Answer #1

Ans. Correct option is Brazil decognizes again of $300,000 on the transaction As per section recognize any loss its own stch.

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