Clayborn Products, Inc. distributes inventory to its sole shareholder as a dividend during the year. The inventory has a basis of $30,000 to the corporation and a value of $40,000 at the time of the distribution. The inventory is encumbered by a $20,000 liability that is assumed by the shareholder. THIS IS ALSO ILLUSTRATED ON THE TOPIC 7 APPLICATION HANDOUT. Select ALL of the TRUE statements from the list below. The shareholder has taxable income of $40,000 on the distribution. The shareholder has taxable income of $20,000 on the distribution. The corporation has a gain of $10,000 on the distribution and E\&P is increased by $10,000 as a result. The shareholder's basis in the inventory is $20,000. The shareholder's basis in the inventory is $40,000. The corporation transfers out $40,000 of E\&P on the distribution. The corporation transfers out $20,000 of E\&P on the distribution