Parent owns 100% of subsidiary.

The two corporations have the following balance sheet.

Assets	Parent	Subsidiary
General assets	1,500,000	750,000
Investment in Subsidiary	200,000
Note receivable from Subsidiary	1,000,000
Total	2,700,000	750,000
Liabilities and Equity
General liabilities	1,500,000	150,000
Note payable to parent		1,000,000
Common Stock	300,000	200,000
Retained Earnings (deficit)	900,000	-600,000
Total	2,700,000	750,000

Parents basis in Subsidiary stock is $200,000. The corporations do not file a consolidated tax return.

Prior to liquidation, Subsidiary uses $150,000 to pay off the general liabilities.

Subsidiary transfers all of its assets to Parent in a complete liquidation.

What are the consequence to Subsidiary and Parent?