Tar Heel Corporation had current and accumulated E&P of $460,000 at December 3120X3. On December 31, the company made a distribution of land to its sole shareholder, William Roy. The land's fair market value was $165,000 and its tax and E&P adjusted tax basis to Tar Heel was $42,000. William assumed a mortgage attached to the land of $18,500. The tax consequences of the distribution to William in 20x3 would be: Multiple Choice $165,000 dividend and an adjusted tax basis in the land of $165,000 $165,000 dividend and an adjusted tax basis in the land of $146,500 dividend of $146,500 and an adjusted tax basis in the land of $165.000 dividend of $146,500 and an adjusted tax basis in the land of $146,500