General Inertia Corporation Made a Pro Rata Distribution of $50,000

General Inertia Corporation made a pro rata distribution of $50,000 to Tiara, Inc. in partial liquidation of the company on December 31, 20X3. Tiara, Inc. owns 500 shares (50%) of General Inertia. The distribution was in exchange for 250 shares of Tiara's stock in the company. After the partial liquidation, Tiara continued to own 50% of the remaining stock in General Inertia. At the time of the distribution, the shares had a fair market value of $200 per share. Tiara's income tax basis in the shares was $100 per share. General Inertia had total E&P of $800,000 at the time of the distribution. What amount of dividend or capital gain does Tiara recognize because of the transaction?

A) Tiara recognizes dividend income of $50,000.
B) Tiara recognizes capital gain of $50,000.
C) Tiara does not recognize any dividend income or capital gain.
D) Tiara recognizes capital gain of $25,000.