Otter 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,Emmet Jugg.The land's fair market value was $50,000 and its tax and E&P basis to Otter was $30,000.Emmet 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 Otter's total taxable income and federal income tax paid because of the distribution (assume a tax rate of 34%).Using your solution,compute Otter's current E&P for 20X3.

Question

Quizplus · Accepted Answer

The Answer of Otter 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,Emmet Jugg.The land's fair market value was $50,000 and its tax and E&P basis to Otter was $30,000.Emmet 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 Otter's total taxable income and federal income tax paid because of the distribution (assume a tax rate of 34%).Using your solution,compute Otter's current E&P for 20X3.

Otter Corporation Reported Taxable Income of $400,000 from Operations for 20X3.The