MrA and Ms

Mr.A and Ms.B own all of the stock of Salt which in turn owns all of the stock of Pepper.Salt acquired Pepper 15 years ago.Both corporations conduct active businesses and have substantial E&P.During the year, Salt distributed the stock of Pepper to A and B.Both A and B each received 100 shares of Pepper stock worth $50,000.In addition, they both received a Pepper bond with a face value of $10,000 and worth $9,000.Due to the distribution, A and B will each report (assuming the transaction meets the conditions of § 355)

A) No gain or loss
B) $60,000 dividend
C) $59,000 dividend
D) $10,000 dividend
E) $9,000 dividend