Lanco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in the computation oftaxable income were the following items:• MACRS depreciation of $226,000. Depreciation for earnings and profits purposes is $133,000.• A net capital loss carryover of $14,000 from last year.• A net operating loss carryover of $28,900 from last year.• $77,550 capital gain from the distribution of land to the company's sole shareholder (see below).Not included in the computation of taxable income were the following items:• Tax-exempt Income of $9,650.• Life Insurance proceeds of $259,000.• Excess current-year charitable contribution of $2,800 (to be carried over to next year).• Tax-deferred gain of $21,000 on a like-kind exchange..• Nondeductible life insurance premium of $4,100.• Nondeductible Interest expense of $3,900 on a loan used to buy tax-exempt bonds.Lanco's accumulated E&P at the beginning of the year was $3,050,000. During the year, Lanco made the following distributions to itssole shareholder, Luigt:• June 30: $81,000.• September 30: Parcel of land with a fair market value of $96,750. Lanco's adjusted tax basis in the land was $19,200. Luigiassumed an existing mortgage on the property of $21,600.Required:a. Compute Lanco's current E&P.b. Compute the amount of dividend Income reported by Luigi this year because of the distributions.c. Compute Lanco's accumulated E&P at the beginning of next year.a. Current E&Pb. Dividend incomec. Accumulated E&P, beginning of next yearS156,150

Tax-Free Bonds -A government agency issues tax-free bonds to collect money for a certain purpose.…

anco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in axable income were the following items: • MACRS depreciation of $226,000. Depreciation for earnings and profits purposes is $133,000. • A net capital loss carryover of $14,000 from last year. • A net operating loss carryover of $28,900 from last year. • $77,550 capital gain from the distribution of land to the company's sole shareholder (see below). lot included in the computation of taxable income were the following items: • Tax-exempt Income of $9,650. • Life Insurance proceeds of $259,000. Excess current-year charitable contribution of $2.800 (to be carried over to next year

anco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in axable income were the following items: • MACRS depreciation of $226,000. Depreciation for earnings and profits purposes is $133,000. • A net capital loss carryover of $14,000 from last year. • A net operating loss carryover of $28,900 from last year. • $77,550 capital gain from the distribution of land to the company's sole shareholder (see below). lot included in the computation of taxable income were the following items: • Tax-exempt Income of $9,650. • Life Insurance proceeds of $259,000. Excess current-year charitable contribution of $2.800 (to be carried over to next year

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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