To induce Yellow Corporation to build a new manufacturing facility in Knoxville, Tennessee, the city donates land (fair market value of $400,000) and cash of $100,000 to the corporation. Several months after the donation, Yellow Corporation spends $450,000 (which includes the $100,000 received from Knoxville) on the construction of a new plant located on the donated land.

Starling Corporation has accumulated E & Pof $60,000 on January 1, 2020. In 2020, Starling Corporation had an operating loss of $80,000. It distributed cash of $40,000 to Zoe, its sole shareholder, on December 31, 2020. Starling Corporation's balance in its E & P account as of January 1, 2021, is: $60,000 deficit. $20,000 deficit. SO. $60,000