Gerry Is the Sole Shareholder and President of Garmon Corporation

Gerry is the sole shareholder and president of Garmon Corporation. He also owns the office building that serves as the corporation's headquarters. Last year, Garmon paid Gerry $250,000 for the use of the building. Garmon's MTR was 34% and Gerry's was 35%. The revenue agent who audited Garmon's return has concluded that the fair rental value of the office building was $200,000. What is the net impact of this audit conclusion on Gerry and Garmon's combined income tax liability?

A) $17,000 net increase
B) $10,000 net decrease
C) $7,000 net increase
D) $7,000 net decrease