KWP Corporation reported taxable income of $500,000 from operations for this year. During the year, the company made a distribution of an automobile to its sole shareholder, Camilla Esposito. The autos fair market value was $30,000 and its tax basis to KWP was $0. The autos E&P basis was $15,000. KWP had accumulated E&P of $1,500,000.

a. Compute KWPs total taxable income and federal income tax. (HINT: The distribution changes the final taxable income for the corporation)

b. Compute KWPs current E&P.

c. Compute KWPs accumulated E&P at the beginning of next year.