Shareholder owns 100% of Lambda Corporation stock and has a $700,000 basis in that stock. Shareholder has owned the stock for several years. Prior to liquidating, Lambda had the following balance sheet:

For Parts a and b below, determine the following results for the liquidating corporation (Lambda): Gain realized, gain recognized, corporate tax, and disposition of E&P. For Shareholder, determine the following results: Total distribution, gain realized, gain recognized, and basis of noncash property received. Assume a 21% corporate tax rate and that the liquidating corporation pays any necessary taxes resulting from the liquidation. Also, assume no other transactions for the year of liquidation.

a. Shareholder is an individual.

b. Shareholder is a parent corporation of Lambda.

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Assets Basis FMV $ 200,000 1,000,000 $1,200,000 Cash $200,000 600,000 Property Total $800,000 Equity Common stock Retained earnings (and E&P) $1,200,000 $700,000 100,000 $800,000 Total $1,200,000