In the current year, Blue Corporation (With E&P of $100,000) made the following property distributions to its shareholders (all corporations)

Adjusted Basis Fair Market Value Gain(Loss)

Texaco stock investment $20,000 $15,000 $(5,000)

Non-LIFO inventory 10,000 12,000 2,000

Blue Corporation is not a member of a controlled group. [I include this statement for the sake of accuracy, only. For solution purposes you may ignore it.] As a result of the distribution,

a. Blue Corporation recognizes a gain of $2,000 but does not recognize any loss.

b. Blue Corporation recognizes a gain of $2,000 and a loss of $5,000.

c. Blue Corporation recognizes a loss of $3,000.

d. Blue Corporation has no recognized gain or loss.

e. None of the above.