Lanco Corporation, an accrual-method corporation, reported taxable income of $2,450,000 this year. Included in the compu

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Lanco Corporation, an accrual-method corporation, reportedtaxable income of $2,450,000 this year. Included in the computationof taxable income were the following items: MACRS depreciation of$275,000. Depreciation for earnings and profits purposes is$186,000. A net capital loss carryover of $14,400 from last year. Anet operating loss carryover of $28,700 from last year. $75,800capital gain from the distribution of land to the company’s soleshareholder (see below). Not included in the computation of taxableincome were the following items: Tax-exempt income of $7,850. Lifeinsurance proceeds of $286,000. Excess current-year charitablecontribution of $3,400 (to be carried over to next year).Tax-deferred gain of $23,000 on a like-kind exchange. Nondeductiblelife insurance premium of $5,400. Nondeductible interest expense of$3,000 on a loan used to buy tax-exempt bonds. Lanco's accumulatedE&P at the beginning of the year was $3,310,000. During theyear, Lanco made the following distributions to its soleshareholder, Luigi (Lug) Nutt: June 30: $50,000. September 30:Parcel of land with a fair market value of $95,500. Lanco’sadjusted tax basis in the land was $19,700. Lug assumed an existingmortgage on the property of $20,700. Required: Compute Lanco’scurrent E&P before the distributions. Compute the amount ofdividend income reported by Lug Nutt this year as a result of thedistributions. Compute Lanco’s accumulated E&P at the beginningof next year.
a. Current E&P: $2,031,150 (incorrect)
b. Dividend income: $124,800 (correct)
c. Accumulated E&P, beginning of next year: $5,216,350(incorrect)
Please help me with the two incorrect answers. thank you