Final Answer:
Glenda Goodwich is planning to contribute property in exchange for stock in a corporation in a §351 exchange. If she also receives cash, Glenda will not recognize a gain on the exchange.
Thus option 2 is correct.
Step-by-step explanation:
In a §351 exchange, if Glenda contributes property to a corporation solely in exchange for stock and receives only stock and no other boot (cash or non-like-kind property), she can defer recognition of gain or loss on the exchange. This means Glenda won't recognize any gain at the time of the exchange.
However, if Glenda receives cash along with the stock, the cash received would be considered boot and might trigger recognition of gain to the extent of the cash received. In this scenario, the question states that Glenda is contributing property for stock but doesn't explicitly mention whether she's receiving any cash.
As a result, if Glenda only receives stock, she won't recognize a gain on the exchange. However, if she receives cash in addition to the stock, she'll have to recognize gain to the extent of the cash received because cash in a §351 exchange is considered boot, leading to potential recognition of gain. The absence of information about cash received in the exchange prevents a definite determination without more specific details.
Therefore option 2 is correct.