Advise Russell concerning the tax aspects of the liquidation alternatives. Determine any actions he could take between now and the liquidation, which may affect these alternatives as part of your analysis.

Russell has earned a fortune manufacturing educational toys for children. After 10 years of designing and producing toys, he sold his patents and got out of the business. At the present time, the only non-cash assets left in his wholly-owned corporation are some equipment (basis $100,000; fair market value, $100,000) and a piece of appreciated land which had been purchased for $50,000 and is now worth $550,000. The balance sheet of the corporation as of this date is:  ASSETS LIABILITIES Cash $105,000 Notes Payable:Equipment   100,000 To Russell $125,000Land              $ 50,000 To Others 15,000 Total Liabilities $140,000 OWNER'S EQUITY Common Stock $ 88,000 Retained Earnings 27,000 Total Owner's Equity $115,000 TOTAL LIABILITIESTOTAL ASSETS $255,000 & OWNER EQUITY $225,000 Russell's attorneys have convinced him to liquidate his corporation and suggested he seek your assistance concerning the liquidation. The corporation has been dormant since December 31, 2020 so it will have no revenues or expenses for the current taxable year ending December 31, 2021. Russell and his wife, Jane, have a joint taxable income of approximately $100,000 from their other 2021 activities. Their previous year's joint taxable incomes were $500,000, but they expect subsequent years' incomes to be similar to that of this year. Russell plans to liquidate the Illinois-based corporation near the end of this year. He will use some of the cash to pay off the note due to others and keep the rest of the assets for personal use with no foreseeable likelihood of subsequent disposition. Additional facts from the client:

2. Interest on notes payable is simple 10% payable after the end of each calendar year.
4. The equipment was purchased on January 1, 2012. It had a four-year life for tax purposes with the straight-line depreciation method used. The original cost of the equipment was $300,000. A salvage value of $100,000 is used for financial accounting purposes.
6. The land was purchased on January 1, 2000.
8. The "Retained Earnings" equals "Earnings and Profits".
10. The taxable income of the corporation in each prior year has been $10,000.
12. Russell and Jane each earned about one-half of their joint income. Both are on the cash basis.
14. The corporation is on the accrual basis.
16. Russell's basis in his stock is $88,000.
18. Russell and Jane are in their late 50's. Their two children are young adults both secure in their financial situations.