Pete – who is a husband, father, son and friend to many – owns stock

Pete – who is a husband, father, son and friend to many – owns stock in Q Corp with a-basis of $40,000. In a qualified tax-free reorganization involving Q Corp and R Corp, Pete exchanges his Q Corp stock for R Corp stock worth $75,000, and cash of $25,000. What is Pete’s recognized gain and what is his basis in the R Corp stock?

Gain $60,000; Basis $75,000

Gain $60,000; Basis $40,000

Gain $25,000; Basis $75,000

Gain $25,000; Basis $40,000

None of the above