Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a

A) $300,000 gain.

B) $0 gain.

C) $200,000 gain.

D) none of the above1.

2.

Geranova Corporation is liquidated, with Vlade receiving $7,500 in money, other property having a $5,000 FMV, and a $2,000 mortgage on the property. Vlades basis in his Geranova Co. stock is $7,000. Upon liquidation, Vlades must recognize a gain of

A) 2,000.

B) $3,500.

C) $5,000.

D) $12,500.