Gulf Corporation distributes a building used in its business to Sandra in exchange for all her Gulf stock. Sandras basis in her stock is $30,000 and the property she receives has a $90,000 FMV. As part of the distribution, Sandra assumes a liability associated with the property of $65,000. The property's basis prior to the liquidating distribution was $25,000.

1. What are the tax consequences of the distribution to Sandra (gain or loss recognized and basis in the building)?

2. To Gulf Corporation (gain or loss recognized)?