INK, Ltd$.$ distributes inventory with a basis of $$20,000$ to a shareholder in

complete liquidation. The shareholder, who has a basis of $$10,000$ for the

stock, immediately sells the inventory independently for $$50,000.$ Tax

results to the parties are:

a$.$ INK recognizes $$30,000$ of ordinary income, and the shareholder

recognizes $$40,000$ of capital gain.

b$.$ INK recognizes no gain or loss, but the shareholder recognizes

$$40,000$ of ordinary income.

c$.$ INK recognizes $$30,000$ of ordinary income and the shareholder

recognizes no gain or loss.