TB MC Qu$.18-49($Static$)$ Cavalier Corporation had current and accumulated...

Cavalier Corporation had current and accumulated E&P of $$500,000$ on December $31203.$ On December $31,$ the

company made a distribution of land to its sole shareholder, Tom Jefferson. The land's fair market value was

$$200,000$ and its tax and E&P adjusted tax basis to Cavalier was $$50,000.$ The tax consequences of the distribution

to Cavalier in $20$X$3$ would be:

Multiple Choice

No gain recognized and a reduction in E&P of $$200,000.$

$$150,000$ gain recognized and a reduction in E&P of $$200,000.$

$$150,000$ gain recognized and a reduction in E&P of $$50,000.$

No gain recognized and a reduction in E&P of $$50,000.$