Giles Corporation adopted a plan of liquidation during September 2019 and subsequently sold its only asset, land, that had a basis of $480,000 to Pat (an unrelated taxpayer) for $500,000. Under the terms of the sale, Giles received $100,000 cash and Pat's note in the amount of $400,000.

The note is payable on January 3, 2020 and carries an adequate rate of interest.

Immediately after the sale, Giles distributed the $100,000 cash and note (with a fair market value of $400,000) in complete liquidation to Carlos, the sole shareholder of Giles Corporation. Carlos has a basis of

$200,000 for his Giles stock.

a. What amount of gain must Giles Corporation recognize on the distribution of the note to Carlos?

b. Assuming Carlos wants to defer gain recognition, what amount of gain must be recognized by Carlos for 2019?

c. What amount of gain will be recognized by Carlos when he collects the $400,000 payment on the note in 2020?