Prepare your answers using clearly written computations Show your work Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021, its second year of operation Transactions Cost Taxable income $330,000 Federal income tax liability paid $69,300 Tax exempt interest income $5,000 Meals expense provided by a restaurant (total) $3,000 Premiums paid on key employee life insurance $3,500 Increase in cash surrender value attributable to life insurance premiums $700 Proceeds from key employee life insurance policy $130,000 Cash surrender value of life insurance policy at distribution $20,000 Excess of capitol losses over capital gains $13,000 MACRS deduction $26,000 Straight line depreciation using ADS lives $16,000 Section 179 expense elected during 2020 $25,000 Dividends received from domestic corporations (less than 20 owned) $35,000 Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $10,000 during 2021 In addition, Sparrow sold property on installment during 2020 The property was sold for $40,000 and had an adjusted basis at sale of $32,000 During 2021, Sparrow received a $15,000 payment on the installment sale Finally, assume that no additional first year depreciation was claimed Compute Sparrow's current E P

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Prepare your answers using clearly written computations. Show your work Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021, its

Prepare your answers using clearly written computations. Show your work

Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021, its second year of operation:

Transactions	Cost
Taxable income	$330,000
Federal income tax liability paid	$69,300
Tax-exempt interest income	$5,000
Meals expense provided by a restaurant (total)	$3,000
Premiums paid on key employee life insurance	$3,500
Increase in cash surrender value attributable to life insurance premiums	$700
Proceeds from key employee life insurance policy	$130,000
Cash surrender value of life insurance policy at distribution	$20,000
Excess of capitol losses over capital gains	$13,000
MACRS deduction	$26,000
Straight-line depreciation using ADS lives	$16,000
Section 179 expense elected during 2020	$25,000
Dividends received from domestic corporations (less than 20% owned)	$35,000

Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $10,000 during 2021. In addition, Sparrow sold property on installment during 2020. The property was sold for $40,000 and had an adjusted basis at sale of $32,000. During 2021, Sparrow received a $15,000 payment on the installment sale. Finally, assume that no additional first-year depreciation was claimed. Compute Sparrow's current E & P.