Vincent Company transferred business realty (FMV $2.3 million; adjusted tax basis $973,000) to Massur Inc. in exchange for Massur common stock. Which of the following statements is false?
A. If Vincent recognizes gain on its exchange of property for stock, Vincent's tax basis in its Massur stock is $2.3 million.
B. If Vincent is in control of Massur immediately after the exchange, Massur's tax basis in the transferred realty is $973,000.
C. If Vincent is not in control of Massur immediately after the exchange, both Vincent and Massur must recognize a $1,327,000 gain.
D. If Vincent does not recognize gain on its exchange of property for stock, Vincent's tax basis in its Massur stock is $973,000.
Answer: C
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