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.

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

C is :