Catamount Company Had Current and Accumulated E&P of $500,000 at December

Multiple Choice

Catamount Company had current and accumulated E&P of $500,000 at December 31, year 1.On December 31, the company made a distribution of land to its sole shareholder, Caroline West.The land's fair market value was $200,000 and its tax and E&P basis to Catamount was $250,000.The tax consequences of the distribution to Catamount in year 1 would be:

A) No loss recognized and a reduction in E&P of $250,000.
B) $50,000 tax and E&P loss recognized and a reduction in E&P of $250,000.
C) $50,000 tax and E&P loss recognized and a reduction in E&P of $150,000.
D) No loss recognized and a reduction in E&P of $200,000.