On January $1,2023,$ Jacob organized Echo Corporation $($the Company$)$ by purchasing all $5,000$ shares of the Company$$s common stock $($$$1$ par value$)$ for $$5,000,000.$ The Company, which will file form $1120,$ operates on a calendar year basis and uses the accrual method of accounting.

On January $1,2023,$ the Company borrowed $$3,000,000$ from Truist Bank and purchased an executive jet $($the aircraft$)$ which it leases to a related party on an hourly and on demand basis. For tax purposes, the aircraft is being depreciated on the $200$ percent declining balance method with a half year convention and a recovery period of $5$ years. The related party uses the aircraft to provide transportation services for business executives and high net worth individuals primarily on the East Coast of the United States.

In addition to federal form $1120,$ the Company will only be required to file state income tax returns in Virginia. The terms of the Company$$s rental agreement with the related party require the Company to cover all costs of the operation of the aircraft, including repairs and maintenance, fuel, crew salaries, insurance, and all other operating costs.

There are no temporary differences other than depreciation and the Company did not have any permanent differences during $2023.$

The Company did not pay any dividends during or after the year ended December $31,2023.$

The Company$$s $2023$ trial balance follows.

Required

$1.$ Calculate the Company$$s current federal and Virginia income tax. Ignore deferred taxes. Show your work.

$2.$ Indicate whether or not the Company is subject to the Personal Holding Company tax. The requirement is to determine if the Company for $2023$ is subject to this tax and to explain why or why not.

Hint: A good reading of the instructions to Schedule PH $($Form $1120)$ will help you with requirement $2$ and give you a basic understanding of the personal holding company tax.