Elm Corporation has 100 shares of stock outstanding of which Oak Corporation owns 75 shares with a basis of $10,000, and Sherman Forest owns 25 shares with a basis of $30,000. Elm Corporation has a $50,000 net operating loss carryover and the following assets (all held long-term):

	Basis	Fair Market Value
Cash	$20,000	$20,000
Installment Note	$10,000	$40,000
Land	$1,000	$10,000
Equipment (all Sec. 1245 recapture)	$5,000	$10,000
	$36,000	$80,000

1. What are the tax consequences if Elm Corporation adopts a plan of complete liquidation and distributes the $20,000 cash to Sherman and all its remaining assets to Oak Corporation?
2. As an alternative, what are the tax consequences if Elm Corporation distributes $20,000 cash to Sherman in redemption of his 25 shares, and 10 days later, Elm adopts a plan of complete liquidation and distributes its remaining assets to Oak Corporation? What are Elm and Oak trying to accomplish through the redemption of Shermans shares?