1 In each of the following independent situations, indicate taxable distribution and XYZ corporation (E \& P \$1,000,000) distributes machinery, adjusted basis $40,000 Fair Market Value of $160,000 to sole shareholder. The property is subject to Liability of $40,000 which shareholder assumes (A) How much dividend Johnson report (B) What is his basis in the machinery What is the effect on corporation's earnings and E&P