El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20X3. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 380 shares of El Toro stock with a tax basis of $66 per share. The fair market value of the El Toro stock was $106 per share on June 30, 20X3. What are the tax consequences of the stock distribution to Raoul?

A. $0 dividend income and a tax basis in the new stock of $66 per share.

B. $20,140 dividend and a tax basis in the new stock of $106 per share.

C. $0 dividend income and a tax basis in the new stock of $106 per share.

D. $0 dividend income and a tax basis in the new stock of $44 per share.