North Corporation has $200,000 of accumulated E&P at the beginning of the current year. North distributed $300,000 cash during the current year to its shareholders. The company’s operating results for the current year are as follows:
Taxable income...........................................................$100,000
Tax-exempt bond interest..............................................10,000
Dividends-received deduction.........................................7,000
Federal income tax liability............................................22,250
Net capital losses............................................................27,000
U.S. production activities deduction............................12,000
a. What is North Corporation’s current E&P?
b. How much of the $300,000 cash distribution is taxable as a dividend?
c. What is North’s accumulated E&P balance (deficit) at the end of the current year?