Z Corp Elected S Corporation Status When It Was Formed

Z Corp elected S corporation status when it was formed.It purchased land for $15,000 and constructed a warehouse to store inventory for its business.During the past taxable year, Z distributed the warehouse and land, valued at $200,000, to its shareholders.The original cost to construct the building was $120,000, and straight-line depreciation of $100,000 has accumulated.The values are allocated as follows: $$\begin{array}{l}&\text { Fair Market Value }&\text { Adjusted Basis }&\text { Appreciation }\\\text { Land } & \$ 60,000 & \$ 15,000 & \$ 45,000 \\\text { Building } & 140,000 & 20,000 & 120,000 \\\text { Total } & \$ 200,000 & \$ 35,000 & \$ 165,000\end{array}$$ Assuming sufficient AAA, what is the effect on the shareholders' bases for this distribution?

A) $35,000 increase
B) $165,000 increase
C) $35,000 decrease
D) $200,000 decrease