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 $300,000,fair market value of $280,000)to Gray Corporation as a contribution to capital.Assume that Mary also contributed other property in the same transaction having a basis of $10,000 and fair market value of $50,000.In liquidation,Gray distributes the land to Jane.At the time of the liquidation,the land is worth $200,000.