Mary and Jane, Unrelated Taxpayers, Own Gray Corporation's Stock Equally

Essay

Mary and Jane, unrelated taxpayers, own Gray Corporation's stock equally.One year before the complete liquidation of Gray, Mary transfers land (basis of $420,000, fair market value of $350,000) to Gray Corporation as a contribution to capital.Assume that Mary also contributed other property in the same transaction having a basis of $20,000 and fair market value of $95,000.In liquidation, Gray distributes the land to Jane.At the time of the liquidation, the land is worth $290,000.