Lanco Corporation, an accrual-method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items:MACRS depreciation of $200,000. Depreciation for earnings and profits purposes is $120,000.A net capital loss carryover of $10,000 from last year.A net operating loss carryover of $25,000 from last year.$65,000 capital gain from the distribution of land to the companys sole shareholder (see below).

Not included in the computation of taxable income were the following items:Tax-exempt income of $5,000.Life insurance proceeds of $250,000.Excess current-year charitable contribution of $2,500 (to be carried over to next year).Tax-deferred gain of $20,000 on a like-kind exchange.Nondeductible life insurance premium of $3,500.Nondeductible interest expense of $1,000 on a loan used to buy tax-exempt bonds.

Lancos accumulated E&P at the beginning of the year was $2,400,000. During the year, Lanco made the following distributions to its sole shareholder, Luigi (Lug) Nutt:June 30: $50,000.September 30: Parcel of land with a fair market value of $75,000. Lancos adjusted tax basis in the land was $10,000. Lug assumed an existing mortgage on the property of $15,000.

a. Compute Lanco's current E&P before the distributions. 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. a. Current E&P b. Dividend income c. Accumulated E&P, beginning of next year $ 110,000