Malcolm Receives a Liquidating Distribution of Land with a Fair $\begin{array}{llcc} \text { Malcolm } & \text { Blithe } \\\end{array}$

Short Answer

Malcolm receives a liquidating distribution of land with a fair market value of $14,000 and a basis of $19,000 from Blithe Corporation, an S corporation. Malcolm's basis in the stock is $21,000. What must Malcolm and Blithe report as income (loss) from the property distribution? $\begin{array}{llcc} \text { Malcolm } & \text { Blithe } \\\end{array}$
A) $\$-0- \quad \$-0-$
B) $\$(2,000) \quad \$(5,000)$
C) $\$(7,000) \quad \$-0-$
D) $\$(7,000) \quad \$(5,000)$ ?