Identify which of the following statements is true.
A. The FMV of an obligation is used to determine the E&P reduction when a corporation distributes the obligation to its shareholders.
B. When appreciated property is distributed to shareholders, E&P must be increased by any gain (net of taxes) recognized due to the property distribution.
C. When appreciated property is distributed in a nonliquidating distribution, the net effect on the distributing corporation's E&P is that it is reduced by the net of the FMV of the property distributed minus the gain (net of federal income taxes) recognized due to the property distribution.
D. Only B and C above are true.
Answer: D
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