Turbo Corporation distributed land to shareholder Lea in partial liquidation of her interest. At the time of the distribution, the land had an adjusted basis of $$80,000$ and a fair market value of $$125,000.$ Lea exchanged $90$ of $100$ shares of Turbo stock for the land. At the time of the partial liquidation, Lea$$s adjusted basis in the $90$ shares was $$60,000.$ Other unrelated shareholders of Turbo own a combined $150$ shares outstanding. Just prior to the distribution, Turbo had earnings and profits of $$150,000.$ What are the amounts and the character of income that Turbo Corporation and Lea must recognize on the partial liquidation?

Turbo

Lea

A$.$

Turbo

$$0$

Lea

$$65,000$ capital gain

B$.$

Turbo

$$0$

Lea

$$65,000$ dividend

C$.$

Turbo

$$45,000$ capital gain

Lea

$$65,000$ capital gain

D$.$

Turbo

$$45,000$ capital gain

Lea

$$125,000$ dividend