Hero C. distributed equipment having a fair market value of $300,000 and an adjusted basis of $15,000 to James in exchange for 85 percent of his interest in Hero. The distribution was under a plan of partial liquidation that resulted in a contraction of the business. Jamess adjusted basis in the stock exchanged was $180,000. Prior to the distribution, Heros earnings and profits were $500,000. What is the character and amount of Jamess recognized gain on the distribution?

A. $120,000 capital gain

B. $150,000 capital gain

C. $150,000 capital loss

D. $300,000 dividend income

E. None of the above