Nocattee Corporation was initially formed with cash contributions from five unrelated shareholders, each of whom contributed $10,000 in exchange for 20% of Nocattee’s voting common stock. . The shareholders have made no further contributions. Assume that none of the shareholders are dealers in stock so that their stock investment is a capital asset . After several years of operations, the corporation adopts a plan of complete liquidation and distributes assets with a basis to the corporation with a basis to the corporation of $50,000 and a fair market value of $30,000. Thus, each shareholder receives $25,000 of the corporate assets upon liquidation At the time of liquidation, the corporation had $125, 000 of its current earnings and profits account and no accumulated earnings and profits.

 What if the corporation sold the assets to a third party for $30,000 and distributed the cash to the shareholders upon liquidation?

 What are the tax consequences to the corporation and its shareholders?