Redbud Co., an S corporation, makes an operating distribution to its sole shareholder of property in which it has a $30,000 basis. What amount of gain (loss) does Redbud recognize if the property has a fair market value of either (1) $37,000, or (2) $26,000? If basis is $37,000, then no gain or loss; if basis is $26,000, then no gain or loss O If basis is $37,000, then $7,000 gain; if basis is $26,000, then no gain or loss O If basis is $37,000, then $7,000 gain; if basis is $26,000, then ($4,000) loss O If basis is $37,000, then no gain or loss; if basis is $26,000, then ($4,000) loss