Jeffrey owns 100% of HR Company. In 2016, he lent the firm $70,000. In 2018, he cancelled the debt. The results of this debt cancellation are:

A. HR Company recognizes $70,000 gain; no effect to Jeffrey

B. HR Company recognizes $70,000 gain; Jeffry has $70,000 bad debt

C. HR Company has no income; no effect to Jeffrey

D. HR Company has no income; Jeffrey has $70,000 bad debt

E. HR Company has no income; Jeffrey increases his basis in HR Company Stock