Lanco Corporation, an accrual-method corporation, reported taxable income of $2,210,000 this year. Included in the computation of taxable income were the following items:

• MACRS depreciation of $244,000. Depreciation for earnings and profits purposes is $154,000.
• A net capital loss carryover of $19,000 from last year.
• A net operating loss carryover of $25,300 from last year.
• $87,550 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 $8,700.
• Life insurance proceeds of $297,000.
• Excess current-year charitable contribution of $4,300 (to be carried over to next year).
• Tax-deferred gain of $22,100 on a like-kind exchange.
• Nondeductible life insurance premium of $6,200.
• Nondeductible interest expense of $3,300 on a loan used to buy tax-exempt bonds.

Lanco's accumulated E&P at the beginning of the year was $2,490,000. During the year, Lanco made the following distributions to its sole shareholder, Luigi (Lug) Nutt:

• June 30: $98,000.
• September 30: Parcel of land with a fair market value of $99,250. Lancos adjusted tax basis in the land was $11,700. Lug assumed an existing mortgage on the property of $17,600.

Required:

1. Compute Lancos current E&P.
2. Compute the amount of dividend income reported by Lug Nutt this year as a result of the distributions.
3. Compute Lancos accumulated E&P at the beginning of next year.

Answer is complete but not entirely correct. a. Current E&P $ 1,884,800 b. Dividend income $ 179,650 c. Accumulated E&P, beginning of next year $ 4,195,150