C corporation owns 100% of the stock B corporation. The adjusted basis of its stock investment is $100,000. A plan of liquidation is adopted. B corporation distributes to C corporation assets with $325,000 FMV and $275,000 adjusted basis. B corporation has $150,000 earnings and profits (E&P) balance.

What is B corporations gain and /or loss on the distribution?

$50,000 realized gain, but no recognized gain.

$225,000 realized gain and recognized gain.

$150,000 realized gain and recognized gain.

$275,000 realized gain, but no recognized gain