Ms. Fred is the president and sole shareholder of Grapefruit Corporation (stock basis of $500,000). Since 2004, Grapefruits sole business has been the purchase and resale of used farming equipment. In December 2013, Grapefruit Corporation transferred to Ms. Fred its entire inventory (basis of $1.2 million) in a transaction described as a sale by both the corporation and Ms. Fred. The sales price for the inventory was $2 million, its fair market value. The amount is to be paid by Ms. Fred to Grapefruit at some future date. The $2 million debt obligation is not evidenced by a promissory note and, to date, Ms. Fred has not made any payments (principal or interest) on the obligation. After the inventory transfer, Grapefruit Corporation had no remaining assets and ceased to conduct any business. The corporate did not formally liquidate under state law. What are the tax consequences of this liquidation to Ms. Fred?