Gertrude, age 67 and widowed, owns 50 acres of land on the Chattahoochee River that she and her husband purchased for $10,000 when they were newlyweds in 1980. The land is near Atlanta and is now worth at least $1,500,000 if sold undivided. Gertrude is considering selling the land to her wholly owned ABC Corporation for its $1,500,000 market value. Alternatively, Gertrude is considering transferring ownership of the land to ABC in exchange for additional ABC stock. ABC will subdivide the land and sell it off as 50 one-acre lots with total proceeds of the lot sales expected to be at least $3,000,000. Land development costs will be approximately $300,000 and sales commissions will be 5% of the sales price. Analyze the tax implications of Gertrude’s two choices. Assume that Gertrude’s marginal tax rate on ordinary income is 37% and that she has never generated capital gains. Assume that ABC would recognize ordinary income on the lot sales taxed at the marginal tax rate of 21%. (Ignore the 3.8% net investment income tax for higher-income taxpayers for this problem.)