A Corporation Distributes Land and the Related Liability to Meg

A corporation distributes land and the related liability to Meg, its sole shareholder. The land has an FMV of $60,000 and is subject to a liability of $70,000. The corporation has current and accumulated E&P of $80,000. The corporation's adjusted basis for the property is $70,000. What effect does the transaction have on the corporation?

A) A recognized loss of $10,000; its E&P is unchanged.
B) A recognized loss of $10,000; its E&P is reduced by $70,000.
C) No recognized gain or loss; its E&P is unchanged by the distribution.
D) No recognized gain or loss; its E&P is reduced by $60,000.