Tar Heel Corporation Had Current and Accumulated E&P of $570,000

Tar Heel Corporation had current and accumulated E&P of $570,000 at December 31 20X3. On December 31, the company made a distribution of land to its sole shareholder, William Roy. The land's fair market value was $170,000 and its tax and E&P basis to Tar Heel was $32,000. William assumed a mortgage attached to the land of $13,500. The tax consequences of the distribution to William in 20X3 would be:

A) $170,000 dividend and a tax basis in the land of $170,000.
B) $170,000 dividend and a tax basis in the land of $156,500.
C) Dividend of $156,500 and a tax basis in the land of $170,000.
D) Dividend of $156,500 and a tax basis in the land of $156,500.