X Co. adopts a plan of complete liquidation and makes the following pro rata distributions to its shareholders (assume all are individuals):

A Cash: $70,000;

B Inventory: FMV-$20,000 Basis-$20,000 Mortgage-$10,000;

C Inventory: FMV-$30,000 Basis-$15,000 Mortgage-$40,000;

D Capital Asset: FMV-$500 Basis-$2,800;

(Assume that X Co. acquired the property distributed to D in a Sec. 351 transfer 6 months before adopting the plan of liquidation when the FMV of the property was $800 and X Co.s basis was $2,800).

E Capital Asset: FMV-$10,000 Basis-$4,000.

Each shareholder had a $1,000 basis in the X Co. stock.

X Co.s recognized gain or loss on the distribution to:

A is: a. 0; b. $70,000 capital gain; c. $69,000 capital gain; d. None of the above.

B is: a. 0; b. $10,000 ordinary income; c. $20,000 ordinary income; d. None of the above.

C is: a. $25,000 ordinary income; b. $35,000 ordinary income; c. $65,000 ordinary income; d. None of the above.

D is: a. 0; b. $-2,300 capital loss; c. $-300 capital loss; d. None of the above.