C is corrent. Since a recapitalization is a reorganization, a realized gain is recognized only to the extent that consideration other than stock or securities is received, including the FMV of an excess of the principal amount of securities received over the principal amount of securities surrendered. Since no securities were surrendered, the excess principal amount of securities received is $10,000, and Moore’s realized gain of $23,500 [($108,000 + $10,500) — $95,000] is recognized to the extent of the $10,500 FMV of the excess principal amount of securities received.
A is incorrect. Gain must be recognized to the extent that boot was received.
B is incorrect. The recognized gain is limited to the boot received.
D is incorrect. The recognized gain is limited to the boot received.
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