Since the fair market value of the property is $350K, the gain to Starling is $145K ($350K-$205K).
However, the stockholder is getting $350K-$220K(liability assumed) and so the distribution (in actual terms) is $130K. Since the Corp has sufficient E&P, this amount of $130K is dividend.
so answer is
d. Straling has a gain of $145,000 and Zoe has dividend income of $130,000