One of the following statements with regard to stock dividends and stock rights is false. Which one is false?

A) Disproportionate distribution of stock rights is not includable in gross income.

B) If stock dividends are not taxable, there is no reduction in the corporation's Earnings and Profits account.

C) If stock dividends are taxable, the distribution is treated by the distributing corporation in the same manner as any other taxable property dividend.

D) If stock rights are taxable; basis to the shareholder-distributee is the FMV of the Rights.