Comprehenslve Problem $14-72($LO $14-1,$ LO $14-2,$ LO $14\mathrm{.}3,$ LO $14\mathrm{.}4,$ LO $14-5)($Algo$)$

Lanco Corporation, an accrual$-$method corporation, reported taxable income of $$1,790,000$ this year. Included in the computation of

taxable income were the following Items:

MACRS depreciation of $$227,000.$ Depreclation for earnings and profits purposes is $$127,000.$

A net capital loss carryover of $$20,700$ from last year.

A net operating loss carryover of $$29,900$ from last year.

$$77,850$ capital gain from the distribution of land to the company's sole shareholder $($see below$).$

Not Included in the computation of taxable income were the following Items:

Tax$-$exempt income of $$8\mathrm{.}450.$

Llfe Insurance proceeds of $$261,000.$

Excess current$-$year charitable contribution of $$2900($to be carried over to next year$).$

Tax$-$deferred gain of $$26,400$ on a like$-$kind exchange.

Nondeductible life insurance premium of $$3,300.$

Nondeductible Interest expense of $$3,300$ on a loan used to buy tax$-$exempt bonds.

Lanco accrued and pald federal Income taxes this year of $$375,900.$ Lanco's accumulated E&P at the beginning of the year was

$$2850,000.$ During the year, Lanco made the following distributlons to its sole shareholder, Lulgl:

June $30$:$$91,000.$

September $30$: Parcel of land with a falr market value of $$89,250.$ Lanco's tax basis in the land was $$11,400.$ Lulgl assumed an

existing mortgage on the property of $$19,100.$

Required:

a$.$ Compute Lanco's current E&P$.$

b$.$ Compute the amount of dividend income reported by Luigi this year as a result of the distributions.

c$.$ Compute Lanco's accumulated E&P at the beginning of next year.

c$.$ Accumulated E&P$,$ beginning of next year