Cardinal Corporation, a lendar year taxpayer, receives dividend incorre of $250,000 from a oorporation in which it holds a 10% interest. Cardinal also receives Interest income of $35,000 from municipal bonds. (The municipality used the proceeds from the bond issue to o ca construct a lbrary.) Cardinal borrowed funds to purchase the municipal bonds and pays s20,000 of interest on the loan. Excluding these three items, Cardinar's taxable income is $500,000. Cardinal has $150,000 of accumulated E & P at the end of the prior year, and it poild Federal income taxes of $131,250 during the year. Click here for the Dividend Recelved Deduction Table, Ater these thre Rems are taken into account, Cardinal Corporation's taxable income l 575,000 575,000 X tb b. Cardinal Corporation's accumulated E& P at the start of next year is 15,000x