Volunteer Corporation reported taxable income of $410,000 from operations this year. The company paid federal income taxes of $139,400 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The lands fair market value was $80,000 and its tax and E&P basis to Volunteer was $57,500. Rocky assumed a mortgage attached to the land of $16,000. Any gain from the distribution will be taxed at 34 percent. The company had accumulated E&P of $880,000 at the beginning of the year.

a.

Compute Volunteers total taxable income and federal income tax.

Total taxable income
Federal income tax

b.

Compute Volunteer's current E&P before the distribution.

Current E & P

c.

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

Accumulated E & P

d.

What amount of dividend income does Rocky report as a result of the distribution?

Dividend income

e.

What is Rockys income tax basis in the land received from Volunteer?

Income tax basis