Senior owned a commercial office building that she had operated for many years, which had an adjusted basis, after $250,000 straight line depreciation of $750,000. Senior sold the office building at its fair market value, to SJ, Inc. a corporation in which Junior and her children only 80% of the stock, for SJ’s $1 million recourse note with adequate interest, secured by a mortgage on the commercial office building.

What is the tax effect on Senior and JR, Inc. of the sale?