Question Sparrow Corporation (a calendar year, accrual basis taxpayer) had the follows transactions in 2015, its second year of operation Taxable income $330,000 Federal income tax liability paid 112,000 Tax exempt interest income 5,000 Meal and entertainment expenses (total) 3,000 Premiums paid on...

Calculation of E and P as per federal taxation Taxable income 3300 ...

Question: Sparrow Corporation (a calendar year, accrual basis taxpayer) had the follows transactions in 2015, its second

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Sparrow Corporation (a calendar year, accrual basis taxpayer) had the follows transactions in 2015, its second year of operation.

Taxable income		$330,000
Federal income tax liability paid		112,000
Tax-exempt interest income		5,000
Meal and entertainment expenses (total)		3,000
Premiums paid on key employee life insurance		3,500
Increase in cash surrender value attributable to life insurance premiums		700
Proceeds from key employee life insurance policy		130,000
Cash surrender value of life insurance policy at distribution		20,000
Excess of capital losses over capital gains		13,000
MACRS deduction	26,000
Straight-line depreciation using ADS lives	16,000
Section 179 expense elected during 2014	25,000
Dividends received from domestic corporation (less than 20% owned)	25,000

Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $10,000 during 2015. In addition, Sparrow sold property on installment during 2014. The property was sold for $40,000 and had an adjusted basis at sale of $32,000. During 2015, Sparrow received a $15,000 payment on the installment sale. Finally, assume that no additional first-year depreciation was claimed. Compute Sparrow's current E & P.