El Toro Corporation Declared a Common Stock Distribution to All

El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20X3. Shareholders will receive one share of El Toro stock for each two shares of stock they already own. Raoul owns 350 shares of El Toro stock, with a tax basis of $81 per share. The fair market value of the El Toro stock was $121 per share on June 30, 20X3. What are the tax consequences of the stock distribution to Raoul?

A) $0 dividend income and a tax basis in the new stock of $121 per share.
B) $0 dividend income and a tax basis in the new stock of $81 per share.
C) $0 dividend income and a tax basis in the new stock of $54 per share.
D) $21,175 dividend and a tax basis in the new stock of $121 per share.