Navy Corporation makes a property distribution to its sole shareholder, Troy. The property distributed is a car (fair market value of $10,000; basis of $15,000) that is subject to a $2,000 liability which Troy assumes. Navy makes no other distributions during the current year. Navy has no accumulated E & P and $15,000 of current E & P from other sources during the year. What is Navy's E & P after taking into account the distribution of the car?
A) $2,000.
B) $3,000.
C) $5,000.
D) $7,000.
E) None of the above.

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The Answer of Navy Corporation makes a property distribution to its sole shareholder, Troy. The property distributed is a car (fair market value of $10,000; basis of $15,000) that is subject to a $2,000 liability which Troy assumes. Navy makes no other distributions during the current year. Navy has no accumulated E & P and $15,000 of current E & P from other sources during the year. What is Navy's E & P after taking into account the distribution of the car?
A) $2,000.
B) $3,000.
C) $5,000.
D) $7,000.
E) None of the above.

Navy Corporation Makes a Property Distribution to Its Sole Shareholder