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 no gain recognized; $111,700 basis in M&W shares
C. $228,500 gain realized and recognized; $111,700 basis in M&W shares
D. None of the above
Answer: A
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