PEGGY owns 100% of Epsilon Corporation's stock. She purchased her stock ten years ago, and her current basis for the stock is $125,000. On June 10, Peggy decided to liquidate Epsilon. Epsilon's balance sheet prior to the sale of the assets, payment of the liquidation expenses, and payment of federal income taxes, as well as some additional information is as follows:

Assets Basis FMV Cash s 230,000 33.000 Marketable securities Equipment $ 230,000 40,000 170,000 370.000 260.000 700.000 Land S 810,000 $1,223,000 Total Equity Common stock $ 1.223,000 $ 125,000 685.000 Retained earnings (and E&P) Total $ 810,000 $1,223,000 $ The corporation has claimed depreciation of $170.000 on the equipment. The corporation received the marketable securities as a capital contribution from Peggy three years earlier at a time when their adjusted basis was $40.000 and their FMV was $26.000. Epsilon incurred $27,000 in liquidation expenses in its final tax year. Recognized Assets Basis FMV gain (loss) Character of gain or loss $ Cash Marketable securities Equipment Land 230,000 $ 230,000 40,000 33,000 170,000 260.000 370,000 700.000 810,000 $ 1,223,000 Total Assets Basis FMV Cash s 230,000 33.000 Marketable securities Equipment $ 230,000 40,000 170,000 370.000 260.000 700.000 Land S 810,000 $1,223,000 Total Equity Common stock $ 1.223,000 $ 125,000 685.000 Retained earnings (and E&P) Total $ 810,000 $1,223,000 $ The corporation has claimed depreciation of $170.000 on the equipment. The corporation received the marketable securities as a capital contribution from Peggy three years earlier at a time when their adjusted basis was $40.000 and their FMV was $26.000. Epsilon incurred $27,000 in liquidation expenses in its final tax year. Recognized Assets Basis FMV gain (loss) Character of gain or loss $ Cash Marketable securities Equipment Land 230,000 $ 230,000 40,000 33,000 170,000 260.000 370,000 700.000 810,000 $ 1,223,000 Total