Lanco Corporation, an accrual-method corporation, reported taxable income of $1,530,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $230,500. Straight-line depreciation would have been $128,000. A net capital loss carryover of $20,500 from last year. A net operating loss carryover of $27,000 from last year. $63,850 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 $6,700. Life insurance proceeds of $276,000. Excess current-year charitable contribution of $2,400 (to be carried over to next year). Tax-deferred gain of $23,300 on a like-kind exchange. Federal income tax refund from last year of $43,000. Nondeductible life insurance premium of $3,900. Nondeductible interest expense of $2,700 on a loan used to buy tax-exempt bonds. Lanco's accumulated E&P at the beginning of the year was $3,090,000. During the year, Lanco made the following distributions to its sole shareholder, Luigi (Lug) Nutt: June 30: $86,000. September 30: Parcel of land with a fair market value of $78,750. Lancos tax basis in the land was $14,900. Lug assumed an existing mortgage on the property of $23,400. Required:

1. Compute Lancos current E&P. Compute the amount of dividend income reported by Lug Nutt this year as a result of the distributions.

2. Compute Lancos accumulated E&P at the beginning of next year.