Problem 8 Last year Grizzly Corporation acquired land and securities in a $351 tax-free exchange. On the date of the transfer, the land had a basis of $720,000 and a fair market value of $1,000,000 and the securities had a basis of $110,000 and a fair market value of $250,000. Grizzly Corporation has two shareholders, Nancy and Peter, unrelated individuals. Nancy owns 85% of the stock in Grizzly Corporation, and Peter owns 15%. The corporation adopts a plan of liquidation in the current year. On this date, the value of the land has decreased to $500,000. What is the effect of each of the following on Grizzly Corporation? Which option should be selected? 1. Distribute all of the land to Nancy. 2. Distribute all of the land to Peter. 3. Distribute 85% of the land to Nancy and 15% to Peter. 4. Distribute 50% of the land to Nancy and 50% to Peter. 5. Sell the land and distribute the proceeds of $500,000 proportionately to Nancy and to Peter