LO.2 Compute current E & P for Jade Corporation (a calendar year, accrual basis taxpayer). Jade had the following transactions during 2010, its second year of operation.

Taxable income $330,000 Federal income tax liability paid 112,000 Interest income from tax-exempt payors 5,000 Meals and entertainment expenses (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 capital losses over capital gains 13,000 MACRS deduction 26,000 Straight-line depreciation using ADS lives 16,000 Section 179 expense elected during 2009 100,000 Organizational expenses incurred in 2009 14,000 Dividends received from domestic corporations (less than 20% owned) 25,000 l Jade uses the LIFO inventory method, and its LIFO recapture amount increased by $10,000 during 2010.

l Jade sold some property on installments during 2009. The property was sold for

$40,000 and had an adjusted basis at sale of $32,000. During 2010, Jade received a

$15,000 payment on the installment sale.

l Jade elected in 2009 to amortize qualified organizational expenses.