Friedman, Inc., an S Corporation, holds some highly appreciated land and inventory, and some marketable securities that have declined in value.

2.Friedman, Inc., an S Corporation, holds some highly appreciated land and inventory, and some marketable securities that have declined in value. It anticipates a sale of these assets and a complete liquidation of the company over the next two years. Arnold Schwartz, the CFO, calls you, asking how to treat these transactions. Prepare a tax memo dated June 18, 2008, indicating what you told Arnold over the phone.