In the current year, Red Corporation has $150,000 of current and accumulated E&P. On March 2, Red Corporation distributes to Randy, a shareholder, a parcel of land (a capital asset) having a $60,000 FMV. The land has a $42,000 adjusted basis (for both tax and E&P purposes) to Red Corporation and is subject to an $10,000 mortgage, which Randy assumes. Assume a 34% marginal corporate tax rate.

a) What is the amount and character of the income Randy recognizes as a result of the distribution?
b) What is Randy's basis for the land?
c) What is the amount and character of Red Corporation's gain or loss as a result of the distribution?
d) What effect does the distribution have on Red Corporation's E&P?