Ten years previous, Ms. Aldo contributed an office building including land to Aldo Home Furnishings and Design, a C corporation. The property will be used for office and warehouse space. Ms. Aldo acquired the property and used it as rental property (depreciable) for three years prior to the contribution to the corporation. The property was exchanged for a 30 percent equity interest in the corporation. After the contribution of the property, Ms. Aldo had an 80% interest in the corporation. Her adjusted tax basis in the office building at the time of the contribution to the corporation was $900,000 (building $600,000 and $300,000 land) The buildings appraised FMV on date of contribution to the business was $1,000,000. During the current year, Ms. Aldo decided to retire and close the business. On the last day of the year the corporation sold the property (building and land) to an unrelated purchaser for $2,000,000. A realtor was paid a 5 percent commission. The corporation will liquidate its inventory shortly and the company may need your assistance with that at a later date. Required: Write a tax research memo describing the correct tax treatment related to the facts above. Be sure to cite your primary sources properly and use the proper tax research memo format. DO NOT COPY THE ITEMS BELOW INTO YOUR MEMO. Address them in your analysis. 1. Based on the factors above, did Ms. Aldo recognize a gain on the contribution of the office building to the corporation? Hint, use IRC Section 351 and other IRC sections in your analysis to explain your answer. Explain, be specific and concise. (15 points) 2. What was the corporations basis and holding period in the property immediately after the contribution? Explain. Be specific. (15 points) 3. Considering that the property is depreciable property, determine the adjusted basis of the property on the date of sale. You will need to consult the depreciation tables. Assume that the contribution of the property to the corporation was made on the first day of the year and the corporations sale of the property was made on the last day of the year (ten years later). Be mindful that the mid-month convention is built in the MACRS table for the year of acquisition but not in the year of the disposition (sale). (25 points). 4. Calculate the realized amount received, adjusted basis, and the realized gain on the sale of the property from the corporation to the unrelated purchaser. (15 points) 5. Will the corporation have a recognized gain on the sale of the building? Explain using your understanding of realized versus recognized. Address the character variable of any recognized gain and the 20 percent recapture requirement of Section 291 recapture. Compute the amount of 20 percent recapture. Explain your understanding of each concept. (15 points) 6. Calculate the corporations after-tax cash flow on the sale of the building. Assume there is a $300,000 mortgage balance at the time of sale. Show your calculation using a table within the analysis section of the memo. Remember, depreciation deductions do not represent cash outflows. Explain your analysis. Be specific. (10 points)