Rose Corporation distributes land with a fair market value of $70,000 and an adjusted basis of $80,000. The land is subject to a liability of $40,000. What is the total effect of the distribution on the E&P of Rose?

a. Roses E&P does not change.

b. Roses E&P is reduced by $30,000.

c. Roses E&P is reduced by $40,000.

d. Roses E&P is reduced by $70,000.

e. None of the above statements are correct