Bicycle Tire Corporation had current and accumulated E&P of $600,000 at December 31 year 1. On December 31, the company made a distribution of land to its sole shareholder, Sam Stone. The land's fair market value was $200,000 and its tax and E&P basis to Bicycle Tire was $25,000. Sam assumed a mortgage attached to the land of $20,000. The tax consequences of the distribution to Sam in year 1 would be:

Question 7 options:

	$200,000 dividend and a tax basis in the land of $200,000
	$200,000 dividend and a tax basis in the land of $190,000
	Dividend of $190,000 and a tax basis in the land of $200,000
	Dividend of $190,000 and a tax basis in the land of $190,000