Storrs$-$It Corporation distributes land to its shareholder, Jim, that has a fair market value of $$36,000$ and an attached mortgage of $$10,000($which Jim assumes$).$ Storrs$-$It has tax and E&P basis of $$6,000$ in the land. Storrs$-$It has $$100,000$ of current E&P $($excluding the net of tax gain on the property distribution$).$ What is the total net effect on Storrs$-$It's E&P from the distribution, assuming a $21\%$ tax rate on the gain?

Multiple choice question.

$($$$26,000)$

$$4,000$

$($$$2,300)$