Beaver Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes of $170,000 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Eugenia VanDam. The land's fair market value was $20,000 and its tax and E&P basis to Beaver was $50,000. Eugenia assumed a mortgage on the land of $25,000. Any gain from the distribution will be taxed at 34 percent. Beaver had accumulated E&P of $1,500,000.
a. Compute Beaver's total taxable income and federal income tax.
b. Compute Beaver's current E&P before the distribution.
c. Compute Beaver's accumulated E&P at the beginning of next year.
d. What amount of dividend income does Eugenia report as a result of the distribution?
e. What is Eugenia's income tax basis in the land received from Beaver?