Under Illinois Corporation's plan of liquidation, the corporation distributes land to one of its shareholders, Springer. The land, which is used in Illinois trade or business, has a $20,000 adjusted basis and a $60,000 FMV on the distribution date. What are the tax consequences of this distribution to Illinois?

Ordinary income of $60,000.

Section 1231 capital gains of $60,000.

Section 1231 capital gains of $40,000.

No gain or loss recognized.