Twister, an S corporation, has no earnings and profits. In Year 1, Twister distributed property with a fair market value of $65,000 and an adjusted basis of $52,000 to Carlos, its sole shareholder. After recognizing his share of any corporate gain or loss, his adjusted basis in Twister's stock at year end was $50,000. How should the distribution be handled by Carlos?

A. $50,000 as return of capital and $15,000 as taxable capital gain.

B. $50,000 as return of capital and $15,000 as nontaxable distributions.

C. $50,000 as return of capital and $2,000 as taxable capital gain.

D. $50,000 as nontaxable distributions.