Mug Corporation has CEP of $150,000 and AEP of $30,000 and is owned as follows. Henrieta 25%, Petunia 30%, Dudley 40% and Broom Corp 5%. Petunia and Dudley are mom/son. All of the other shareholders are friendly but are otherwise not related. What is the tax consequence in each scenario for the shareholder and Mug Corporation?

- Mug makes a liquidating distribution of land (FMV $100,000 and basis of $130,000) equally split between Petunia and Dudley. Mug bought the land 9 years ago. Petunias stock basis is $40,000 and Dudley stock basis is $60,000.