Poplar Corp. has always been an S corporation shareholder. On December 31, Poplar made an operating distribution of $10,000 cash to Walter, its sole shareholder. What amount and character of gain (loss) must Walter recognize on the distribution if he has a basis in his Poplar stock of either (1) $12,000, or (2) $6,000? O If basis is $12,000, then ($2,000) capital loss; if basis is $6,000, then $4,000 ordinary income O If basis is $12,000, then no gain or loss; if basis is $6,000, then $4,000 capital gain O If basis is $12,000, then ($2,000) capital loss; if basis is $6,000, then $4,000 capital gain If basis is $12,000, then no gain or loss; if basis is $6,000, then $4,000 ordinary income