LO.7 In the current year, Carmine Corporation is liquidated under the general rules of § 331 and § 336.

It has cash of $200,000 and undeveloped land (basis of $100,000 and fair market value of $400,000). After taxes, Carmine distributes all remaining assets to Amy, its sole shareholder. Amy’s basis in the Carmine stock is $50,000.

a. What are Carmine Corporation’s income tax consequences?

b. What are Amy’s income tax consequences?

c. What basis will Amy have in the land?