Assumption:

X owns a rental building (its only asset) with a gross FMV of $1,000, subject to a nonrecourse mortgage of $400. Xs adjusted basis for this building is $300. A owns all of Xs stock, with a basis of $100. X has $200 of E&P. X is on the accrual method of accounting and reports on the calendar year. Assume that the corporate tax payable by X on $700 gain is $250 and on $600 gain is $200.

Problem:

X adopts a plan of complete liquidation and distributes the property to A "in kind" pursuant to this plan. A then sells the property to B for $600 in cash, with B taking subject to the $400 mortgage.