Compute solars total taxable income and federal income tax

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Reference no: EM131211826

Solar Corporation reported taxable income of $400,000 from operations for 20X3. The company paid federal income taxes of $136,000 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, tom soy. The land's fair market value was $50,000 and its tax and E&P basis to Otter was $30,000. tom assumed a mortgage attached to the land of $10,000. Any gain from the distribution will be taxed at 34%. The company had accumulated E&P of $900,000 at the beginning of the year. Compute solar's total taxable income and federal income tax paid because of the distribution (assume a tax rate of 34%). Using your solution, compute solar's current E&P for 20X3.

Reference no: EM131211826

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