Traxler, Inc., a cash basis corporation, distributes its only remaining asset, $20,000 of unrealized accounts receivable (with a $0 basis) and cash of $10,000 to Sal, its sole shareholder, in cancellation of his stock, pursuant to a plan of complete liquidation. Traxler has no business operations or other taxable income for the year. Traxler retains enough cash to pay any taxes. If Sal's basis in his stock is $10,000, the tax result is:

Question options:

	Traxler has no recognized gain and Sal has no income until he collects the receivables.
	Traxler recognizes pays taxes on $20,000 of ordinary income. Sal has no recognized gain or loss.
	Traxler recognizes 20,000 of income and pays taxes on this income. Sal has a gain of $20,000.