In a current distribution, Crossroads Corporation (a C corporation) distributes $60,000 to its sole shareholder Harley. Crossroads has earnings and profits of $55,000 and Harley's basis in her stock is $20,000. After the distribution, Harley's basis is

Select one:

a. $5,000.

b. $15,000.

c. $20,000.

d. $60,000.

Poppy Corporation (a C corporation) was formed three years ago. Poppy's E&P history is as follows:

Year Current E&P Distributions

2005 $6,000 $9,000

2006 5,000 1,000

2007 1,000 0

Poppy Corporation's accumulated E&P on January 1 will be:

Select one:

a. $0.

b. $7,000.

c. $5,000.

d. $12,000.