Wood, a U.S. corporation, owns 30% of Hout, a foreign corporation. The remaining 70% of Hout is owned by other foreign corporations not controlled by Wood. Houts functional currency is the euro. Wood receives a 50,000 distribution from Hout. If the average exchange rate for the E & P to which the dividend is attributed is 1.2: $1, the exchange rate at year end is .95: $1, and on the date of the dividend payment the exchange rate is 1.1: $1, what is Woods tax result from the distribution?

a. Wood receives a dividend of $41,667 and realizes an exchange loss of $3,788 ($41,667 minus $45,455).

b. Wood receives a dividend of $45,455 (50,000/1.1) with no exchange gain or loss.

c. Wood receives a dividend of $45,455 and realizes an exchange gain of $3,788 [$45,455 minus $41,667 (50,000/1.2)].

d. Wood receives a dividend of $52,632 (50,000/.95) with no exchange gain or loss.