Question $8$: Dried Fruit Corp. has had a valid S Corp election in effect at all times since its incorporation.

The Dried Fruit Corp. stock is owned one$-$third by Raisin and two$-$thirds by Prune. All

shareholders are US resident citizen individuals. At the beginning of the current year, Raisin's

basis in his shares was $$36,000$ and Prune's basis in her shares was $$12,000.$ During the

current year, Dried Fruit Corp. earned $$216,000$ of net income from operations. Raisin's

share was $$72,000$; Prune's share was $$144,000.$ On July $1$ st$,$ Dried Fruit Corp. distributed

$$96,000$ to Raisin and $$192,000$ to Prune. How much gain does Prune recognize as a result

of this transaction?

$$36,000$

$$0$

$$12,000$

$$24,000$