$$200,000$

$5148000$

$5$ Hal $\mathrm{.}069$

$43781009$

$971\mathrm{.}000$

Candies. Inc, distributes some defective candles to its shareholders. The market walue of the candies was $$20,000($adjusted basis $=$$$60,000).$ What are the tax consequences of the distribution to Candles?

$$0$ gain or loss recognized

$$40,000$ gain recognized

$$40,000$ loss recognized