Top. Inc., a New York corporation, is in the process

Top. Inc., a New York corporation, is in the process of being liquidated. Top Inc. has two shareholders: (i) GEF Corp., a Delaware corporation, which owns 90% of the stock ($9,000 basis), and (ii) Harriet R, who owns 10% of the stock ($1,000 basis). After selling almost of all its assets, Top Inc. distributes cash ($100,000 total) to its shareholders. GEF Corp. receives $90,000 and Harriet receives $10,000.

  1. What is the U.S. tax treatment of the distribution to GEF on the liquidation of Top Inc.?
  2. What is the U.S. tax treatment of the distribution to Harriet on the liquidation of Top Inc.?
 

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