Hero C. distributed equipment having a fair market value of $300,000 and an adjusted basis of $15,000 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. Prior to the distribution, Hero’s earnings and profits were $500,000. 

What is the character and amount of James’s recognized gain on the distribution?

Answer rating: 100% (QA)

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