An S Corporation has four shareholdrs. The Corporation has land with a fair market value of $100,000 and a basis of $20,000. The corporation distributes the land in-kind to the four shareholders. Each shareholders' basis in the corporation is $1,000. Assume the corporation has always been an S. Assume also that the AAA balance prior to the property distribution is zero.

a Each shareholder has a $20,000 gain

b Each shareholder has a $20,000 gain and a $4,000 gain.

c Each shareholder ahs a $4,000 gain.

d Each shareholder has no gain or loss until sellling the property.

e None of the above

Which one is the correct answer and explain why?