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Lanco Corporation, an accrual-method corporation, reported taxable income of $2,040,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $318,000. Depreciation for earnings and profits purposes is $203,000. A net capital loss carryover of $19,100 from last year. A net operating loss carryover of $34,900 from last year, $69,800 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 $8,200, . Life insurance proceeds of $336,000 Excess current year charitable contribution of $3,800 (to be carried over to next year) Tax-deferred gain of $23,800 on a like kind exchange Nondeductible life insurance premium of $3,700 Nondeductible interest expense of $1,200 on a loan used to buy tax-exempt bonds Lanco accrued and paid federal income taxes this year of $306,600. Lanco's accumulated E&P at the beginning of the year was $2,450,000. During the year, Lanco made the following distributions to its sole shareholder. Luigi (Lug) Nutt: June 30, $88,000 September 30: Parcel of land with a fair market value of $80,500. Lanco's adjusted tax basis in the land was $10,700. Lug assumed an existing mortgage on the property of $18,500 Required: Required: a. Compute Lanco's current E&P. b. Compute the amount of dividend income reported by Lug Nutt this year as a result of the distributions. c. Compute Lanco's accumulated E&P at the beginning of next year. Answer is complete but not entirely correct. a. Current E&P $ 2,237,900 b. Dividend income $ 62.000 c. Accumulated E&P beginning of next year $ 4,537.900 a. Compute Lanco's current E&P. b. Compute the amount of dividend income reported by Lug Nutt this year as a result of the distributions. c. Compute Lanco's accumulated E&P at the beginning of next year. Answer is complete but not entirely correct. a. Current E&P b. Dividend income c. Accumulated E&P, beginning of next year $ 2.234.000 $ 82,000 $ 4,553,400

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