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. Echo Corporation Trial Balance 12.31.23 Debits Credits Aircraft Cash Accounts receivable Accumulated depreciation 5,917,000 300,000 3,000,000 300,000 Accounts payable Note payable bank Common stock 100,000 3,000,000 5,000 Paid in capital in excess of par 4,995,000 Retained earnings Rental revenues 4,000,000 Interest income 250,000 Fuel 2,500,000 Crew salaries 300,000 Insurance 50,000 Repairs and maintenance 25,000 Personal property taxes 20,000 Interest expense 180,000 Depreciation 300,000 Aircraft storage 48,000 Landing fees 10,000 12,650,000 12,650,000 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.