Mike and Michelle decided to liquidate their jointly owned corporation, Pennsylvania Corporation.

After liquidating its remaining inventory and paying off its remaining liabilities, Pennsylvania had

the following tax accounting balance sheet.

FMV Adjusted basis Appreciation

Cash $200,000 $200,000 0

Building 200,000 100,000 100,000

Land 100,000 150,000 (50,000)

Total $500,000 $450,000 $50,000

Under the terms of the agreement, Mike will receive the $200,000 cash in exchange for his 40

percent interest in Pennsylvania. Mike's tax basis in his Pennsylvania stock is $50,000. Michelle will

receive the building and land in exchange for her 60 percent interest in Pennsylvania. Her tax basis

in the Pennsylvania stock is $100,000.

What amount of gain or loss does Michelle recognize in the complete liquidation and what is her

tax basis in the building and land after the complete liquidation?