31 . A tract of land is distributed to Martha Moore as a dividend . Its basis immediately prior to the distribution was $40,000 , its value is $80 , 000 , and it is subject to a mortgage of $55 000 . The following statements concerning he distribution are all false except a . ESP is increased by $15 ,100 ( liability less basis ) , decreased by $40,000 and increased by the liability b . The net adjustment to the EXP account is $40,000 , the amount of the realized gain The distributing corporation's realized gain of $40 000 is recognized to the extent of the $15 090 he distri ent of the ST The shareholder's basis in the land is $80 000 , its fair market value . Test