1. Besta Corporation adopts a plan for a complete liquidation, and at the time of liquidation has accumulated earnings and profits of $100,000. Lotus Corporation owns 40% of the Besta stock, and has a basis for its Besta stock of $50,000. Lotus Corporation receives the following property as a result of the liquidation of Besta Corporation:

FMVCash $10,000

Real estate $105,000

Stock in ABC Corporation $20,000

Notes receivable $35,000

Total $170,000

What amount of gain is recognized to Lotus Corporation on the liquidation of Besta Corporation?

a) $0

b) $40,000

c) $120,000

d) $170,000