Hazzard Corporation is a C corporation owned by Bo and Luke, two individuals who are (assume) unrelated. Bo owns 80% and Luke owns 20% of Hazzard Corporation. The following assets are to be distributed in complete liquidation of Hazzard Corporation:

Adjusted Basis

Cash 300,000

Inventory 75,000

Investment Land 200,000

Fair Market Value

Cash 300,000

Inventory 100,000

Investment Land 100,000

All of the assets were purchased by Hazzard Corporation many years ago. (Fully explain answer)

What gain or loss would Hazzard recognize if it distributes 80% of the cash, inventory, and land to Bo and 20% of the cash, inventory, and land to Luke? [Bo and Luke would take the land as tenants in common.]

Hazzard acquired the land in a Section 351 transaction 4 years ago. Assume the land had a fair value of $300,000 and a basis of $200,000 at the time it was contributed to Hazzard.