Assume that a taxpayer has $$50,000$ at risk in an activity at the beginning of year one, and during the year has losses from the at$-$risk activity of $$30,000.$ In year two the taxpayer receives a $$25,000$ distribution from the activity which has no other activity during year two. How should the distribution be treated for tax purposes in year two?

a$)$ The distribution has no effect for tax purposes since there was no activity during year two.

b$)$ Reduce the taxpayer$$s at$-$risk amount by $$25,000.$

c$)$ Reduce the taxpayer$$s at$-$risk amount by $$20,000$ and include $$5,000$ in the taxpayer$$s gross income.

d$)$ Include the entire distribution of $$25,000$ in the taxpayer$$s gross income.

e$)$ Both b$.$ and d$.$