|Question||PV Inc. transferred the operating assets of one of its business divisions into newly incorporated SV Inc. in exchange for 100 percent of SV’s stock. PV’s adjusted basis in the operating assets was $4 million, and their FMV was $10 million.
a. Discuss the business reasons why a parent corporation like PV operates a business through a subsidiary like SV.
b. Compute PV’s realized gain, recognized gain, and basis in its SV stock.