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Cindy Seller owns 500 shares of Target, Inc., which she purchased three years ago for $6,000, but which are now worth $32,500. At this point, Purchaser, Inc. acquires all assets of Target for 12 percent of its voting stock and some debentures in a statutory merger. Cindy is asked to turn in her Target shares. In return, she receives 410 shares in Purchaser worth $20,500 and debentures with a par value of $15,000 and a market value of $12,000.
What kind of transaction took place?
What are Cindy’s realized gains?
What are Cindy’s recognized gains?
What is Cindy’s basis in the stocks and debentures received?
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