6-Starling Corporation has accumulated E & P of $60,000 on January 1, 2021. In 2021, Starling Corporation had an operating loss of $80,000. It distributed cash of $40,000 to Zoe, its sole shareholder, on December 31, 2021. Starling Corporation's balance in its E & P account as of January 1, 2022, is:

a.$20,000 deficit.

b.$60,000 deficit.

c.$0.

d.$60,000.

7- Rust Corporation distributes property to its sole shareholder, Andre. The property has a fair market value of $350,000, an adjusted basis of $205,000, and is subject to a liability of $220,000. Current E & P is $500,000. With respect to the distribution, which of the following statements is correct?

a.Rust has a gain of $145,000 and Andre has dividend income of $130,000.

b.Rust has a gain of $15,000 and Andre has dividend income of $350,000.

c.Rust has a gain of $145,000 and Andre's basis in the distributed property is $130,000.

d.Rust has a gain of $130,000 and Andre's basis in the distributed property is $350,000.