PART A: Prestege is owned 100% by Jep Williams. Jep’s tax basis in his Prestege shares is 5,900,000.

Prestege has the following assets and liabilities when it proposes to liquidate.

Asset	FMV	Tax Basis
Cash	200,000	200,000
Equipment	3,300,000	1,800,000
Inventory	800,000	600,000
Land	900,000	700,000
Building	4,700,000	2,300,000
Goodwill	3,000,000	-0-
Totals	12,900,000	5,600,000

REQUIRED:

1. What is the tax effect of a liquidation to Prestege?
2. What is the tax effect of a liquidation to Jep?