Titan Corporation adopts a plan of

liquidation. It distributes an apartment building having a $$3$ million FMV and a $$1\mathrm{.}8$ million

adjusted basis, and land having a $$1$ million FMV and a $$600,000$ adjusted basis, to MNO

Partnership in exchange for all the outstanding Titan stock. MNO Partnership has an

$$800,000$ basis in its Titan stock. Titan has claimed $$600,000$ of MACRS depreciation on the

building. MNO Partnership agrees to assume the $$3$ million mortgage on the land and

building. All of Titan$$s assets other than the building and land are used to pay its federal

income tax liability.

a$.$ What are the amount and character of Titan$$s recognized gain or loss on the distribution?

b$.$ What are the amount and character of MNO Partnership$$s gain or loss on the liquidation?

What is its basis for the land and building?

c$.$ How would your answer to Parts a and b change if the mortgage instead was $$4\mathrm{.}5$

million?