Julio exchanged his $350,000 of bonds and $75,000 of stock (basis $10,000) in Calcite Corporation for $50,000 of stock and $375,000 in bonds in Mercury Corporation. Which is Julio's recognized gain or loss, and which is Julio's basis in his stock? (Points : 2)
Julio has a recognized gain of $25,000 and a basis in his stock of $10,000.
Julio has a recognized gain of $25,000 and a basis in his stock of $40,000.
Julio has a recognized loss of $25,000 and a basis in his stock of $40,000.
Julio has a realized loss of $25,000, no recognized loss, and a basis in his stock of $40,000.