Sunapee Corporation reported taxable income of $700,000 from operations for year 1. During the year, the company made a distribution of land to its sole shareholder, Jean McCarthy. The land's fair market value was $125,000 and its tax and E&P basis to Sunapee was $75,000. Jean assumed a mortgage attached to the land of $25,000. Sunapee's tax rate is 34%. Compute Sunapee's total taxable income and federal income tax paid as a result of the distribution. Using your solution, compute Sunapee's current E&P for year 1.

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The Answer of Sunapee Corporation reported taxable income of $700,000 from operations for year 1. During the year, the company made a distribution of land to its sole shareholder, Jean McCarthy. The land's fair market value was $125,000 and its tax and E&P basis to Sunapee was $75,000. Jean assumed a mortgage attached to the land of $25,000. Sunapee's tax rate is 34%. Compute Sunapee's total taxable income and federal income tax paid as a result of the distribution. Using your solution, compute Sunapee's current E&P for year 1.

Sunapee Corporation Reported Taxable Income of $700,000 from Operations for Year