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 Basis $500 $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 Basis $10,000 $ 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: 15. E is: a. b. 0 $10,000 capital gain $ 6,000 capital gain None of the above c. d