1. Henry Corporation is owned eighty percent (80%) by John and twenty percent (20%) by James who are unrelated to each other. At the time of a Complete Liquidation, Henry Corporation owned Land that had a Fair Market Value of $200,000 and a basis to Henry Corporation of $800,000. The Land was acquired by Henry Corporation in a Section 351 Transfer two (2) years ago from James when its Fair Market Value was $400,000. (Assume that there was no business purpose for the transfer). Pursuant to the Complete Liquidation, the Land is sold to an unrelated third party for $200,000 and the $200,000 proceeds of the sale are distributed proportionately (pro-rata) to John and James (ie. eighty percent (80%) to John and twenty percent (20%) to James). The Recognized Loss to Henry Corporation is:

   		$600,000.
   		$ -0-.
   		$400,000.
   		$200,000.