XYZ corporation (E&P $1,000,000) distributes machinery, adjusted basis $20,000 Fair Market Value of $150,000 to sole shareholder. The property is subject to Liability of $10,000 which shareholder assumes (A) (B) How much dividend Johnson report 140000 150000-10000 What is his basis in the machinery FMV 150000 What is the effect on corporation's eamings and E & P Increase by gain 130000 Increase by liab 10000 Decrease by FMV - 150000 -10000