Assume that at the end of 2021, Clampett, Incorporated (an S corporation) distributes property (fair market value of $50,500, basis of $8,500) to each of its four equal shareholders (aggregate distribution of $202,000). At the time of the distribution, Clampett, Incorporated, has no corporate earnings and profits and J.D. has a basis of $51,400 in his Clampett, Incorporated, stock. How much total income does J.D. recognize as a result of the distribution?

Multiple Choice

• $0

• $8,500

• $42,000

• $50,500

• None of the choices are correct.