On May 10 of the current year, Bethel Corporation distributes to its shareholder Carol $ 10,000 in cash and land (a capital asset) having a $ 78,000 FMV. The land has a $ 26,000 adjusted basis (for both taxable income and E&P purposes) and is subject to a $ 90,000 mortgage, which Carol assumes. Bethel has an E&P balance exceeding the amount distributed and is subject to a 34% marginal corporate tax rate.

A. What are the amount and character of the income Carol recognizes as a result of the distribution?

B. What is Carols basis in the land?

C. What are the amount and character of Bethels gain or loss as a result of the distribution?