Parent Corporation owns 100% of Subsidiary Corporations single class of stock. Parent has a basis of $1.3 million in Subsidiary stock.

Subsidiary adopts a plan of liquidation whereby it distributes property having a basis of $2.4 million and a fair market value of $4 million in redemption of the Subsidiary stock.

What gain or loss does the Subsidiary realize and recognize because of making the liquidating distribution?

What gain or loss does Parent realize and recognize on the surrender of the Subsidiary stock?

What happens to Parents basis in Subsidiary?