The built in loss exception impacts how liquidating distributions are taxed. $(5$ POINTS$)$

a$.$ Explain when and how the built in loss exception applies in regards to liquidating distributions. Be thorough in your explanation.

b$.$ Demonstrate the application of your analysis assuming shareholder contributed in a $$351$ transferred property $($Land #$1)$ with $$150,000$ basis

and FMV of $$75,000$ at contribution. $1$ year later when the property had never been used in business the corporation made a liquidating

distribution of it$.$ At distribution the FMV was $$60,000.$

c$.$ Bonus: How would your answer change in part b$.$ If the shareholder also contributed a second piece of property $($Land #$2)$ at the same time as

Land #$1.$ At contribution Land #$2$ had $$100,000$ basis and FMV of $$300,000.1$ year later when the properties had never been used in business

the corporation made a liquidating distribution of both properties. At distribution the FMV of Land #$2$ was $$300,000.$ Use the same values for

Land #$1$ as listed in part b$.$