Prime Corporation adopts a plan of complete liquidation on January $1$ of the current year. The corporation sells the

assets Isted below to Emperor Corporation during the current year. This sale is followed by the assumption of

Prime's liabilities by Emperor Corporation and a single liquidating distribution of $$850,000$ cash to Hadad $($Prime$\text{'}$s

sole shareholder$)$ on December $12$ of the current year $($assume $2023).$ Hadad has a $$100,000$ basis in his Prime

stock, which he has held for seven years. The following facts are relevant:

Vew tha relevant facts.

Relevant Facts

Requirement a$.$ What are the tax consequences of the liquidation to Prime? $($Enter amounts in whole dollars.$)$

of ordinary income due

Prime Corporation recognizes

to

$,$ and

of

from the sale of the fored assets.

Prime also recognizes

of

from the sale of the land. Prime must report the

from the sale of the inventory to customers as

Al the gain is taxed at a

Inventory costing $$300,000$ is sold to customers for $$750,000.$

Depreciable fixed assets with a $$2,800,000$ adjusted basis are sold for $$3,850,000.$

Depreciation recapture under Sec. $1245$ is $$500,000.$

Land held as a capital asset with a $$10,000,000$ adjusted basis is sold for $$11,500,000.$

Requirement b$.$ What are the tax consequences to Hadad upon his receiving the liquidating distribution?

Hadad recognizes

of

the assets.

one or more properties had an unrealized gain at the time of the distribution to Hadad.

one or more properties had an unrealized loss at the time of the distribution to Hadad.

tax consequences to Hadad do not change.