1.

The Justice Corporation owns a building with a basis of $20,000 that is subject to a debt of $80,000. The FMV of the building is $50,000. Justice distributes the property in a nonliquidating distribution (along with the debt) to Casey, its sole shareholder. What is the net effect of this transaction on Justice Corporations E&P?

		a. $60,000 increase.
		b. $60,000 decrease.
		c. $20,000 decrease.
		d. $30,000 increase.
		e. none of the above.

2.The Marshmello Corporation owns a building with a basis of $200,000. The FMV of the building is $180,000. Marshmello distributes the property in a nonliquidating distribution to Troy, its sole shareholder. Marshmello will recognize a $20,000 loss.

a.true

b.false