Peach Tree Corp. has no accumulated or current earnings and profits through December 31st of the current year. On December 31st Peach Tree Corp. distributes to Grape, its sole shareholder a parcel of land with a basis of $495,000 and a fair market value of $1,045,000, subject to a mortgage of $770,000, which Grape assumed. Grapes basis in the stock is $275,000. Grape plans on growing fruit trees on this land. What portion of the distribution to Grape will be treated as a dividend? Note: do not adjust earnings and profits for the tax effect of any gains or losses due to the distribution.

Group of answer choices

$550,000

$1,045,000

$275,000

$770,000