Assume that at the end of 2019, Clampett, Inc. (an S corporation) distributes property (fair market value of $70,000, basis of $15,000) to each of its four equal shareholders (aggregate distribution of $280,000). At the time of the distribution, Clampett, Inc., has no corporate earnings and profits and J.D. has a basis of $54,000 in his Clampett, Inc., stock. How much income does J.D. recognize as a result of the distribution?

Multiple Choice

• $0.

• $15,000.

• $55,000.

• $70,000.

• None of the choices are correct.