During 2018, Hero Co. distributed equipment having a fair market value of \(\$ 300,000\) and an adjusted basis of \(\$ 150,000\) to James in exchange for 85 percent of his interest in Hero. The distribution was under a plan of partial liquidation that resulted in a contraction of the business. James's adjusted basis in the stock exchanged was \(\$ 180,000\). Hero's earnings and profits were \(\$ 500,000\) prior to the distribution. What is the character and amount of James's recognized gain on the distribution?

a. \(\$ 120,000\) capital gain

b. \(\$ 150,000\) capital gain

c. \(\$ 150,000\) capital loss

d. \(\$ 300,000\) dividend income

e. None of the above