On January 2, Year 1, David loans his S corporation $10,000. By the end of Year 1, Davids stock basis is zero, and his debt basis has been reduced to $8,000. During Year 2, the companys operating income is $10,000. The company also makes distributions to David of $8,000. Which statement is correct?

A.	Debt basis is now $10,000.

B.	$8,000 LTCG.

C.	Stock basis is $2,000.

D.	$2,000 LTCG.

E.	None of the above statements is correct.